E16-26B (LO5) (EPS with Options, Various Situations) Backhome Company's net income for 2017 is $650,000, and 86,000 shares of common were issued and outstanding during 2017. The only potentially dilutive securities outstanding were 25,000 executive stock options issued during 2016, each exercisable for one share at $20.50; none of these have been exercised. The average market price of Backhome's stock during 2017 was $26. Instructions s20.50; none stock during 2017 was $26ne a) Compute diluted earnings per share. (Round to nearest cent.) (b) Assume the same facts as those assumed for part (a), except that 10,000 additional options were issued on October 1, 2017, with an exercise price of $27 (the market price of the common stock on that date). The average market price during the last 3 months of 2017 was $29.50