How much compensation expense will be recognized

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Question - JFK Corporation has 10 executives to whom it grants compensatory stock options on January 1, 2007. At that time, it grants each executive the right to purchase 1,000 shares of its $1 par value common stock at $12/share after a 4-year service period.

The value of each option is estimated to be $2.45 on the grant date. Based on its average employee turnover rate each year, JFK expects that a total of 1 executive will NOT vest in the plan.

If JFK does not change its assumptions, how much compensation expense will be recognized during 2009?

A. $5,513

B. $16,539

C. $22,050

D. $30,000

E. $90,000

Reference no: EM132546922

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