Question

FX Services granted 15.5 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. The common shares have a market price of $8 per share on the grant date. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives? (Round your answer to 1 decimal place.)

Answer 1

$31 million

Step-by-step explanation:

No of shares = 15.5 million

Market price per share on grant date = $8

Market value of common shares = 15.5 * 10⁶ * 8

= $124 million

No of years = 4

Cost per year = ($124 * 10⁶) / 4

= $31 million