Suppose that a firm offers a 3-year compensation option that vests immediately. An employee who resigns has
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Suppose that a firm offers a 3-year compensation option that vests immediately. An employee who resigns has two years to decide whether to exercise the option. Compute annual compensation option expense using the stock price tree in the example in Appendix 16.A. Verify that the present value of the option deductions is $28.15.
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