Question: Under its executive stock option plan, National Corporation granted 18 million options on January 1, 2021, that permit executives to purchase 18 million of the

Under its executive stock option plan, National Corporation granted 18 million options on January 1, 2021, that permit executives to purchase 18 million of the companys $1 par common shares within the next seven years, but not before December 31, 2024 (the vesting date). The exercise price is the market price of the shares on the date of grant, $22 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. 1. Ignoring taxes, what is the total compensation cost pertaining to the stock options? 2. Ignoring taxes, what is the effect on earnings in the year after the options are granted to executives? Under its executive stock option plan, National Corporation granted 18 million options

Under its executive stock option plan, National Corporation granted 18 million options on January 1, 2021, that permit executives to purchase 18 million of the company's $1 par common shares within the next seven years, but not before December 31, 2024 (the vesting date). The exercise price is the market price of the shares on the date of grant, $22 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. 1. Ignoring taxes, what is the total compensation cost pertaining to the stock options? 2. Ignoring taxes, what is the effect on earnings in the year after the options are granted to executives? (For all requirements, enter your answer in millions (i.e., 10,000,000 should be entered as 10).) Answer is complete but not entirely correct. 1. 72 million Total compensation cost Effect on earnings decreased by 2. >$ 24 x million

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