Shipley Corporation had net income for the year of $720,000 and a weighted average number of common shares outstanding during the period of 250,000 shares. The company has a convertible bond issue outstanding. The bonds were issued four years ago at par ($3,000,000), carry a 7% interest rate, and are convertible into 50,000 shares of common stock. The company has a 40% tax rate. Shipleys Diluted Earnings per Share for the year is

a.

$1.98.

b.

$2.68.

c.

$2.82.

d.

$3.10.