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The correct answer is option 3 - Mt. Everest. Mt. Everest is the highest peak in the world and is located in the Himalayan mountain range. `Sagar Matha` is the Nepali name for Mt. Everest, which translates to `Goddess of the Sky` in English. This name reflects the awe-inspiring stature and significance of Mt. Everest in the local culture.
Option 1 - Nanga Parbat is not the correct answer. Nanga Parbat is a peak located in Pakistan`s Himalayas.
Option 2 - Dhaulagiri is also not the correct answer. Dhaulagiri is the seventh highest peak in the world and is located in central Nepal.
Option 4 - Kanchenjunga is also not the correct answer. Kanchenjunga is the third highest peak in the world and is located on the border of Nepal and India.
Therefore, the correct answer is option 3 - Mt. Everest.