What will the company report as an expense for the options

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Reference no: EM131237590

A company has granted 500,000 options to its executives. The stock price and strike price are both $40. The options last for 12 years and vest after 4 years. The company decides to value the options using an expected life of 5 years and a volatility of 30% per annum.

The company pays no dividends and the risk-free rate is 4%. What will the company report as an expense for the options on its income statement?

Reference no: EM131237590

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