JFK Corporation has 10 executives to whom it grants compensatory stock options on

January 1, 2007. At that time, it grants each executive the right to purchase 1,000

shares of its $1 par value common stock at $12/share after a 4-year service period.

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The value of each option is estimated to be $2.45 on the grant date. Based on its

average employee turnover rate each year, JFK expects that a total of 1 executive will

NOT vest in the plan.

If JFK does not change its assumptions, how much compensation expense will be

recognized during 2009?

A. $5,513

B. $16,539

C. $22,050

D. $30,000

E. $90,000