McDonald€™s Corporation is in the business of€”wait, we all know what McDonald€™s does. The company€™s earnings per share information and an accompanying note relating to its computation of EPS follow.

Answer the following questions.
1. Compute the average number of shares outstanding used in McDonald€™s computation of net income per common share for 2007, 2006, and 2005. Do the computation for both basic and diluted EPS.
2. Compute McDonald€™s dividend payout ratio (based on basic EPS) for 2005 through 2007. Has the ratio increased or decreased by a significant amount over the 3-year period?
3. For each year in the 3-year period 2005€“2007, compute the percentage of total stock options that were dilutive. Comment on why the percentage differs from year toyear.

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McDonald's Consolidated Earnings per Share Years Ended December 31, (In millions, except per share data) 2007 2006 2005 $2.395.I $2.02 $1.98 $1.50 S35442 $2.6022 $2.06 $204 $0.67 Net income Net income per common share Net income per common share diluted Dividends per common share PER COMMON SHARE INFORMATION Diluted net income per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share- based compensation calculated using the treasury stock method, of (in millions of shares): 2007-23.5; 2006-17.7; 2005-13.8. Stock options that were not included in diluted weighted-average shares because they would have been antidilutive were (in milions of shares): 2007-0.7: 2006-164; 2005-444 $287 $283 $1.00