Problem 16-17 Employee Stock Options (LO4, CFA2) In its 10Q dated February 4, 2016, LLL, Inc., had outstanding employee stock options representing over 282 million shares of its stock. LLL accountants estimated the value of these options using the Black-Scholes-Merton formula and the following assumptions: S = current stock price = $23.99 K = option strike price = $26.42 r = risk-free interest rate = .043 $\sigma$ = stock volatility = .24 T = time to expiration = 3.5 years What was the estimated value of these employee stock options per share of stock? (Note: LLL pays no dividends.) (Do not round intermediate calculations. Round your answer to 2 decimal places.) Option value per share
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Title: Interpreting Disclosure on Employee Stock Options Intel Corporation reported the following in its 2018 10-K report. Share-Based Compensation Share-based compensation recognized in 2018 was $1.3 billion ($1.2 billion in 2017 and $1.2 billion in 2016). During 2018, the tax benefit that we realized for the tax deduction from share-based awards totaled $399 million ($520 million in 2017 and $616 million in 2016). We grant RSUs with a service condition, as well as RSUs with both a market condition and a service condition, which we call outperformance stock units (OSUs). We estimate the fair value of Restricted Stock Units (RSUs) with a service condition using the value of our common stock on the date of grant, reduced by the present value of dividends expected to be paid on our shares of common stock prior to vesting. We estimate the fair value of OSUs using a Monte Carlo simulation model on the date of grant. We base expected volatility for OSUs on historical volatility. We based the weighted average estimated value of RSU and OSU grants on the weighted average assumptions for each period as follows. RSUs and OSUs Dec. 29, 2018 Dec. 30, 2017 Dec. 31, 2016 Estimated values $41.61 $30.01 $25.30 Risk-free interest rate 2.4% 1.4% 0.9% Dividend yield 2.4% 2.9% 3.3% Volatility 22.0% 23.0% 23.0% Additional information with respect to RSU activity is as follows. Restricted Stock Unit Awards RSU activity in 2018 was as follows. Weighted Average Number of RSUs Grant-Date (in millions) Fair Value December 30, 2017 85.3 $27.51 Granted 30.9 $41.61 Vested (33.6) $26.89 Forfeited (6.3) $30.80 December 29, 2018 76.3 $33.21 What amount did Intel record in 2018 for share-based compensation expense? $Answer billion What is the total fair value of RSUs granted in 2018? Enter answer in millions. Round to the nearest million. $Answer million Imagine that during 2018, all employees immediately sold their shares when their RSUs vested. What profit would the employees have made (before tax)? Hint: Use the RSU average grant-date fair value to approximate Intel's average stock price in 2018. Enter answer in millions. Round to the nearest million. $Answer million
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On December 31, 2020, Berclair Inc. had 480 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 136 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2021. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2021, was $850 million. Also outstanding at December 31 were 30 million incentive stock options granted to key executives on September 13, 2016. The options were exercisable as of September 13, 2020, for 30 million common shares at an exercise price of $56 per share. During 2021, the market price of the common shares averaged $70 per share. The options were exercised on September 1, 2021. Required: Compute Berclair's basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Do not round intermediate calculations.) Please write what is numerator and denominator for basic and diluted
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