On January 1, 2021, Farmer Fabrication issued stock options for 400,000 shares to a division manager. The options have an estimated fair value of $7 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 4% in five years. Suppose that after one year, Farmer estimates that it is not probable that divisional revenue will increase by 4% in five years. Required: 1. What is the revised estimate of the total compensation?