Bays footnote regarding employee stock compensation details the grant of 2 million options during the year, the fair-value of which was computed as $6.50. If the options have, on average, a four-year vesting schedule and the company faces a 35% tax rate on income, what affect would this option grant have on Bays accounts for the year?

Group of answer choices:

A. $1,137,500 increase to deferred tax asset, $1,137,500 decrease to tax expense

B. $1,137,500 decrease to deferred tax asset, $1,137,500 increase to tax expense

C. Indeterminable since the number of options exercised is unknown.

D. $4,550,000 decrease to deferred tax asset, $4,550,000 increase to tax expense

E. $4,550,000 increase to deferred tax asset, $4,550,000 decrease to tax expense