At December 31, 2016, Labrador Ltd. had 800,000 common shares outstanding. In addition, the corporation had 300,000 non-cumulative preferred shares outstanding, which were convertible into 500,000 common shares. During 2017, Labrador paid cash dividends of $300,000 to the common shares and $200,000 to the preferred shares. Net income for 2017 was $1,200,000 and the income tax rate was 40%. Diluted earnings per share for 2017 is