At Dec. 31, 2021, ADMS Co. had 800,000 shares of common stock outstanding. In addition, ADMS had 300,000 shares of preferred stock which were convertible into 500,000 shares of common stock. During 2022, ADMS  paid $300,000 cash dividends on the common stock and 200,000 cash dividends on the preferred stock. Net income for 2022 was $1,700,000 and the income tax rate was 40%. The diluted earnings per share for 2022 is (rounded to the nearest penny):

a. $1.86

b. $2.62

c. 3.76

d. 4.26