On January 1, 2021 Crane Company granted Jack Buchanan, an employee, an option to buy 200 shares of Crane Co. stock for $40 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $4500. Buchanan exercised his option on September 1, 2021, and sold his 200 shares on December 1, 2021. Quoted market prices of Crane Co. stock during 2021 were:

January 1 $38 per share

September 1 $46 per share

December 1 $52 per share

The service period is for two years beginning January 1, 2021. As a result of the option granted to Buchanan, using the fair value method, Crane should recognize compensation expense for 2021 on its books in the amount of

$4500.

$0.

$2250.

$5300.