ABC Company issues 700 common stock options to eligible employees on January 2, year 2. The stock has a $3 par value and the market price at issuance is $12 per share. The employees must work 3 years before exercising their options at $13 per share, and the options expire in 4 years. The market price in 4 years is projected to be $16 per share. An acceptable option pricing model values the options at $6 each at issuance. How much compensation expense will ABC record for year 1?

Answer rating: 100% (QA)

To determine the compensation expense that ABC Company will record for year 1 we need to calculate t... View the full answer