Infernal Blow Damage Calc with Passives

I have a question about the damage calaculation of infernal flow with +physical damage and +fire damage passives.

Are the +physical damage passives applied to the base damage before or after the conversion to fire damage?

Example: If the skill converts 50% of pysical damage to fire damage and you have a +10% physical damage passive and a +5% fire damage passive what does the calaculation look like?

For simplicity, lets say you do 100 physical base damage

1) Physical damage = (100*0.5)*1.1 = 55
Fire damage = (100*0.5)*1.05 = 52.5

OR

2) Physical damage = (100*1.1)*0.5 = 55
Fire damage = (100*1.1)*0.5*1.05 = 57.75

Second one, IIRC.