1. The Shadypine Corp has 1 billion common stocks outstanding. The companys founders and employees currently hold 200 million vested options, each with the strike price of $10. The current stock price $15. The following items are available from Shadypines recent Income Statement:

Sales: $400m

Costs of goods sold: $150m

R&D expenses $20m

Depreciation $30m

Interest Expense $0

Tax Rate 21%

Preferred Dividends $0

Common Dividends $0

What are the companys EPS and Diluted EPS?

2. Exactly 3 years ago, Apple bought some technology equipment for $200 that it had planned to depreciate over 5 years using MACRS for tax purposes. The MACRS depreciation schedule is as follows:

Year Depreciation by recovery year

1. 20%
2. 32%

3 19%

4 12%

5 12%

6 5%

Apple decided to sell this equipment today, and the sale fetched them $190. What are the tax consequences for the company if it has no other capital gain/loss this year? (Tax rate is a flat-21%.)