Description of this paper

Doe corp. granted executive stock options on Jan1,...

Description

Solution


Question

Doe corp. granted executive stock options on Jan1,2011, that permit exec's to purchase 14 million of the companies $1 par common shares within the next 8 years, but not before the vesting date of Dec.31 2013. The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated, ignoring taxes, what is the effect on earnings in the year after the options are granted to executives?

 

Paper#4432 | Written in 18-Jul-2015

Price : $25
SiteLock