On December 31, 2020, Dow Steel Corporation had 660,000 shares of common stock and 306,000 shares...

On December 31, 2020, Dow Steel Corporation had 660,000 shares of common stock and 306,000 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 $460,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2021.

On February 28, 2021, Dow sold 56,000 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, 2021, was $2,400,000. The income tax rate is 25%.

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:

	Options Granted
Date Granted	(adjusted for the stock dividend)		Share Price
December 31, 2019		13,000	$	18
December 31, 2020		8,000	$	27
December 31, 2021		11,500	$	26

The market price of the common stock averaged $26 per share during 2021.

Required:
Compute Dow's earnings per share for the year ended December 31, 2021. (Do not round intermediate calculations. Enter your answers in thousands. Round "Earnings per share" answers to 2 decimal places.)

Expert Solution

ekkarill92 answered 2 years ago

On December 31, 2017, Dow Steel Corporation had 660,000 shares of common stock and 36,000 shares...

On December 31, 2017, Dow Steel Corporation had 660,000 shares of common stock and 36,000 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 $460,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2018. On February 28, 2018, Dow sold 56,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income...

On December 31, 2020, Dow Steel Corporation had 640,000 shares of common stock and 304,000 shares...

On December 31, 2020, Dow Steel Corporation had 640,000 shares of common stock and 304,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $440,000 and $73,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 57,000 common shares. In keeping with its long-term share repurchase plan, 6,000 shares were retired on July 1. Dow's net income...

On December 31, 2020, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares...

On December 31, 2020, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, 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...

On December 31, 2020, Dow Steel Corporation had 720,000 shares of common stock and 312,000 shares...

On December 31, 2020, Dow Steel Corporation had 720,000 shares of common stock and 312,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $520,000 and $81,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 66,000 common shares. In keeping with its long-term share repurchase plan, 8,000 shares were retired on July 1. Dow's net income...

On December 31, 2020, Dow Steel Corporation had 650,000 shares of common stock and 305,000 shares...

On December 31, 2020, Dow Steel Corporation had 650,000 shares of common stock and 305,000 shares of 9%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $450,000 and $74,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 64,000 common shares. In keeping with its long-term share repurchase plan, 7,000 shares were retired on July 1. Dow's net income...

On December 31, 2020, Dow Steel Corporation had 800,000 shares of common stock and 320,000 shares...

On December 31, 2020, Dow Steel Corporation had 800,000 shares of common stock and 320,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $600,000 and $89,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 75,000 common shares. In keeping with its long-term share repurchase plan, 4,000 shares were retired on July 1. Dow's net income...

On December 31, 2017, Dow Steel Corporation had 670,000 shares of common stock and 37,000 shares...

On December 31, 2017, Dow Steel Corporation had 670,000 shares of common stock and 37,000 shares of 7%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $470,000 and $76,000 to common and preferred shareholders, respectively, on December 15, 2018. On February 28, 2018, Dow sold 51,000 common shares. Also, as a part of a 2017 agreement for the acquisition of Merrill Cable Company, another 30,000 shares...

On December 31, 2017, Dow Steel Corporation had 790,000 shares of common stock and 49,000 shares...

On December 31, 2017, Dow Steel Corporation had 790,000 shares of common stock and 49,000 shares of 7%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $590,000 and $88,000 to common and preferred shareholders, respectively, on December 15, 2018. On February 28, 2018, Dow sold 72,000 common shares. In keeping with its long-term share repurchase plan, 6,000 shares were retired on July 1. Dow's net income...

On December 31, 2017, Dow Steel Corporation had 710,000 shares of common stock and 41,000 shares...

On December 31, 2017, Dow Steel Corporation had 710,000 shares of common stock and 41,000 shares of 7%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $510,000 and $80,000 to common and preferred shareholders, respectively, on December 15, 2018. On February 28, 2018, Dow sold 63,000 common shares. In keeping with its long-term share repurchase plan, 4,000 shares were retired on July 1. Dow's net income...

On December 31, 2017, Dow Steel Corporation had 700,000 shares of common stock and 40,000 shares...

On December 31, 2017, Dow Steel Corporation had 700,000 shares of common stock and 40,000 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 $500,000 and $79,000 to common and preferred shareholders, respectively, on December 15, 2018. On February 28, 2018, Dow sold 64,000 common shares. In keeping with its long-term share repurchase plan, 6,000 shares were retired on July 1. Dow's net income...

Question