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A company has granted 20,000 option to its executives. The stock price and strike price are both $30. The options last for 15 years and vest after 5 years. The company decides to value the options using an expected life of 6 years and a volatility of 20% per annum. The company pays no dividends and the risk-free rate is 4%. The company accountant use Black-Scholes formula to find fair value of the options and he calculated d₁ as 0.74 and find value of N(d₁₎ as 0.7704. What will the company report as an expense for these option om its income statment?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92167402

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