3 On January 1 of Year 1, Coley Company established a stock option plan for its senior employees. A total of 1,500,000 options were granted that permit employees to purchase 1,500,000 shares of stock at $50 per share. Each option had a fair value of $6 on the grant date. The market price for Coley stock on January 1 of Year 1 was $50. The employees are required to remain with Coley for three years (Years 1 through 3) to exercise these options. Coley's net income for Year 1, before including any consideration of compensation expense, is $2,000,000. Compute Coley Company's NET INCOME for Year 1. Ignore income taxes. 000 Net loss of $3,000,000 Net loss of $5,000,000 Net loss of $7,000,000 Net income of $5,000,000 Net loss of $1,000,000 Net income of $11,000,000