Question 3 ML Inc. has net income of $3,000,000. It has 125,000 shares of nonconvertible preferred stock with a dividend of $14 per share. It also has 450,000 shares of common stock outstanding for the entire year. The firm also has 6000 stock options outstanding since the beginning of the year with an exercise price of $20/share. Each option can be exercised for 10 shares of common stock. If the average common stock price for the year is $30, diluted EPS is reported as: $2.66 $2.78 $2.40 $3.00