L&T India Ltd has a net income after tax of $2 000 000 for the year ended 30 June 2018. At the beginning of the period L&T India Ltd has 900 000 fully paid-up ordinary shares on issue. On 1 January 2018 L&T India Ltd had issued a further 300 000 fully paid-up ordinary shares at an issue price of $2.00. On 1 March 2018 L&T India Ltd made a one-for-five bonus issue of ordinary shares out of retained earnings. The last sale price of an ordinary share before the bonus issue was $2.50. At the beginning of the current period L&T India Ltd also had 500 000, $1.00, 5% cumulative preference shares on issue. The dividends on the preference shares are not treated as expenses in the statement of comprehensive income. The basic earnings per share for the period ended 30 June 2017 was $1.50 per share.

Required: a) Calculate the basic EPS amount for 2018.

b) Explain what is diluted EPS. Give one example of a security that can dilute the basic EPS. (Detail explaination)