Rand Inc. had a net income of ($ 800,000). During the year, 200,000 shares were outstanding on

Question:

Rand Inc. had a net income of $\$ 800,000$. During the year, 200,000 shares were outstanding on average and Rand's common stock sold at an average market price of $\$ 50$. In addition, Rand had 20,000 stock options outstanding to purchase a total of 20,000 common shares at $\$ 25$ for each option exercised.

Required

a. Compute basic EPS.

b. Compute diluted EPS.

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