Maxwell Corp. is coming to the market with a new offering of 450,000 shares of stock at $22 to the public. Maxwell will receive $19 per share. The firm has one million shares outstanding and earnings of $6 million before recording the new issue. What is the amount of dilution in earnings per share? Hint: flotation costs reduce earnings.

• $2.79

• $1.38

• $1.77

• No dilution occurs since new money is received by Maxwell.