Assume that TPL has a stock-option plan for top management. Each stock option

represents the right to purchase a share of TPL $1 par value common stock in the future at a price

equal to the fair value of the stock at the date of the grant. TPL has 75,000 stock options

outstanding, which were granted at the beginning of 2020. The following data relate to the option

grant:

Exercise price for options $31

Market price at grant date (January 1, 2020) $31

Fair value of options at grant date (January 1, 2020) $2

Service period 4 years