$7$ Millville Company had $100,000$ shares of common stock outstanding throughout the year. In addition, as of January $1,$ the company had issued stock options that allowed employees to purchase $40,000$ shares of common stock. The option exercise price is $$10$ per share. The company has no other potentially dilutive securities$.$ The employees did NOT exercise the options during the year. Net income for the year was $$200,000.$

Compute DILUTED earnings per share assuming that the average stock price for the year was $$16.$

$$1\mathrm{.}74$

$$1\mathrm{.}21$

$$