On January 1, 2013, G Corp. granted stock options to key employees for the purchase of 88,000 shares of the company's common stock at $23 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2015, by the grantees still in the employ of the company. No options were terminated during 2013, but the company does have an experience of 4% forfeitures over the life of the stock options. The market price of the common stock was $29 per share at the date of the grant. G Corp. used the Binomial pricing model and estimated the fair value of each of the options at $10.

What amount should G charge to compensation expense for the year ended December 31, 2013?

Multiple Choice

1. $844,800.

2. $422,400.

3. $880,000.

4. $440,000.