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Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options were granted for 75,000 $1 par common shares. The exercise price equals the $5 market price of the common
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Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options were granted for 75,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2024, and expire December 31, 2025. Each option has a fair value of $1 based on an option pricing model. What is the total compensation cost for this plan

User Vibhor
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5 votes

Answer:

the total compensation cost is $75,000

Step-by-step explanation:

The computation of the total compensation cost for this plan is shown below:

Total compensation cost = option granted × fair value of each option

total compensation cost = 75000 × $1

total compensation cost = $75,000

Here to determined the total compensation cost we simply multiplied the option granted with the fair value of each option so that the correct amount could come

Therefore the total compensation cost is $75,000

User JarrettV
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