On January 1, 2018, Oliver Foods issued stock options for 41,000 shares to a division manager. The options have an estimated fair value of $5 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Oliver Foods' stock price increases by 3% in four years. Oliver Foods initially estimates that it is not probable the goal will be achieved. How much compensation will be recorded in each of the next four years?

Multiple Choice

• $51,650.

• No effect.

• $51,250.

• $17,083.