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 four years. The company decides to value the options using an expected ife of five years and a volatility of 13 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