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A companys stock price is $50 and 10 million shares are outstanding. The company is considering giving its employees three million at-the-money five-year call options.
A companys stock price is $50 and 10 million shares are outstanding. The company is considering giving its employees three million at-the-money five-year call options. Option exercises will be handled by issuing more shares. The stock price volatility is 25%, the five-year risk-free rate is 5% and the company does not pay dividends. Estimate the cost to the company of the employee stock option issue.
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