Option 1: Borneo - Borneo is the third largest island in the world, not the largest.

Option 2: Madagascar - Madagascar is the fourth largest island in the world, not the largest.

Option 3: New Guinea - New Guinea is the correct answer. It is the largest island in the world, located in the southwestern Pacific Ocean. The island is divided between two countries, Papua New Guinea to the east and Indonesia to the west.

Option 4: Sumatra - Sumatra is the sixth largest island in the world, not the largest.

In conclusion, the correct answer is option 3, New Guinea, as it is the largest island in the world.