Problem 19-12 EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options [LO19-4, 19-5, 19-6, 19-7,19-8, 19-10] On December 31, 2017, Dow Steel Corporation had 740,000 shares of common stock and 44,000 shares of 10%, noncumulative, nonconvertible preferred stock issued and outstanding Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $540,000 and $83,000 to common and preferred shareholders, respectively, on December 15, 2018. On February 28, 2018, Dow sold 68,000 common shares. In keeping with its long-term share repurchase plan, 3,000 shares were retired on July 1, Dow's net income for the year ended December 31, 2018, was $2.800,000. The income tax rate is 40%. As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Share Price Options Granted (adjusted for the stock dividend) 21,000 16,000 19,500 Date Granted December 31, 2016 December 31, 2017 December 31, 2018 $ 34 43 S 42 The market price of the common stock averaged $42 per share during 2018. Date Granted Options Granted (adjusted for the stock dividend) 21,000 16,000 19,500 Share Price December 31, 2016 December 31, 2017 December 31, 2018 34 $ 43 42 The market price of the common stock averaged $42 per share during 2018. Required: Compute Dow's earnings per share for the year ended December 31, 2018. (Enter your answers in thousands.) Numerator Denominator Earnings per share Dow's basic Dow's diluted