Bailey Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,500,000 of 10% convertible bonds outstanding during 2020. The preferred stock is convertible into 40,000 shares of common stock. During 2020, Bailey paid dividends of $1.35 per share on the common stock and $4.50 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2020 was $900,000 and the income tax rate was 30%.Basic earnings per share for 2020 is (rounded to the nearest penny)

1. $3.76

2. $3.32

3. $4.05

4. $3.63