For the purposes of calculating diluted EPS, how should the conversion of outstanding convertible bonds be handled?

Question 2 options:

	Decrease the numerator by the amount of after-tax interest expense and increase the denominator by the number of converted shares.
	Increase the numerator by the amount of after-tax interest expense and increase the denominator by the number of converted shares.
	Increase the numerator by the amount of pre-tax interest expense and increase the denominator by the number of converted shares.