Basic EPS = Net income available to common stock shares/Weighted average number of shares outstanding = (32000-2000)/7000 = $ 4.29 Diluted EPS = 32000/(7000+2000*0.5) = $ 4.00 Answer [b] Solution Basic EPS = Net income available to common stock shares/Weighted average number of shares outstanding = (32000-2000)/7000 = $ 4.29 Diluted EPS = 32000/(7000+2000*0.5) = $ 4.00 Answer [b].