Question $5$

Which of the following independent situations is anti$-$dilutive? Phillips Co$.$ has basic EPS of $$5\mathrm{.}00$ per share. If Phillips has $8\%$ convertible bonds with a total face value of $$1,000,000(1,000$ bonds at$,$ $$1,000$ each$).$ The coupon rate was equal to the market rate on issuance. Assume a tax rate of $40$ percent.

Situation $1$: Each of the bonds can be converted to $55$ shares of common stock

Situation $2$: Each of the bonds can be converted to $25$ shares of common stock

Situation $3$: Each of the bonds can be converted to $15$ shares of common stock

Situation $4$: Each of the bonds can be converted to $8$ shares of common stock

None are anti$-$dilutive

All are anti$-$dilutive

$4$ is anti$-$dilutive

$2,3,$ and $4$ are anti$-$dilutive

$3$ and $4$ are anti$-$dilutive