On 1 July 2012 York Ltd (a start-up biotech company) grants its senior manager a choice of receiving cash equivalent of 100 000 shares or 120000 shares. The grant is conditional upon the senior manager working for the entity for 3 years but if the share alternative is chosen, the grant vests after two years. At grant date the entity's share price is $12.50. The entity does not expect to pay dividends in the next 3 years. After taking into account the effects of post-vesting transfer restrictions, the entity estimates the grant-date fair value of the share alternative to be $12. What is the fair value of the equity component of the compound instrument?

A.

$10 000

B.

$20 000

C.

$190 000

D.

$300 000