What is reduction in earnings

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Reference no: EM13134519

Red Inc. issued stock options for 240,000 shares to a division manager. The options have an estimated fair value of $7 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 6% in three years. Red initially estimates that it is probable the goal will be achieved. Ignoring taxes, what is reduction in earnings in 2011?

Reference no: EM13134519

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