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] 10 points On December 31, 2017, Dow Steel Corporation had 730,000 shares of common stock and 43,000 shares of 9%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends 04:14:28of $530,000 and $82,000 to common and preferred shareholders, respectively, on December 15, 2018 On February 28, 2018, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1, Dow's net income for the year ended December 31, 2018, was $2,750,000. The income tax rate is 40%. Skipped 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: eBook Options Granted (adjusted for the stock dividend) 20,000 15,000 18,500 Date Granted Share Price Files December 31, 2016 December 31, 2017 December 31, 2018 $ 32 41 40 Print The market price of the common stock averaged $40 per share during 2018 References Required Compute Dow's earnings per share for the year ended December 31, 2018. (Enter your answers in thousands.) Numerator Earnings per share 3.26 0 Denominator Dow's basic$ Dow's diluted 2,668,000 I 818,000