At December 31, 2007, Kegan Co

Multiple Choice

At December 31, 2007, Kegan Co. had 1,200,000 shares of common stock outstanding. In addition, Kegan had 450,000 shares of preferred stock which were convertible into 750,000 shares of common stock. During 2008, Kegan paid $600,000 cash dividends on the common stock and $400,000 cash dividends on the preferred stock. Net income for 2008 was $3,400,000 and the income tax rate was 40%. The diluted earnings per share for 2008 is (rounded to the nearest penny)

A) $1.24.
B) $1.74.
C) $2.51.
D) $2.84.