Identify the primary inputs necessary to determine the fair value of stock options for compensation expense reporting.

Of these inputs, explain which inputs are subjective.

Calculate the impact on compensation expense and cash flow based on changes in these subjective inputs.

Note: You may want to experiment with the Black$-$Scholes option pricing calculator to understand the impact of changes in assumptions on option values.

Compare and contrast the benefits and disadvantages of a company of using stock options in the compensation program for employees and executives to cash salary and bonus compensation plans.