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Computing Diluted EPS: Stock Options Rand Inc. had net income of $1,760,000. During the year, 400,000 shares were outstanding on average and Rand's common stock

Computing Diluted EPS: Stock Options

Rand Inc. had net income of $1,760,000. During the year, 400,000 shares were outstanding on average and Rand's common stock sold at an average market price of $50 per share. In addition, Rand had 40,000 stock options outstanding to purchase a total of 40,000 common shares at $25 for each option exercised.

Required

a. Compute basic EPS.

b. Compute diluted EPS.

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