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Canada Corp.
A firm has $10 million of outstanding convertible bonds. The coupon on these convertibles is $100 per bond, and each bond is convertible into common stock at a conversion price of $25.

The income statement of the firm before conversion is as follows and EBIT remains at $6 million after conversion. Assume the firm paid $2 million in interest on other outstanding debt in addition to the interest paid on the convertible bonds.

$1.57

$1.59

$1.62

$1.71