During 2020, Madrid Ltd. had 200,000 common shares, 30,000 non-cumulative convertible preferred shares, and $1,500,000 10% convertible bonds outstanding. The preferred shares are convertible into 40,000 common shares. During 2020, Madrid paid dividends of $1.20 per share to the common shares and $2.00 per share to the preferred shares. Each $1,000 bond is convertible into 45 common shares. The net income for 2020 was $900,000 and the income tax rate was 30%.

Diluted earnings per share for 2020 is:

$3.27.

$3.41.

$3.38.

$2.98.