On January 1, 20X1, Grekale granted 5000 stock options the CEO for the purchase of at $10 per share, the then market value of the stock. The options vest at the end of four years. The fair value of the options based on the market price of Grekale's common stock at the date of grant is $7 per share. The CEO left the company on January 1, 20X3. How much cumulative compensation expense will the Company recognize for these options through December 31, 20X4? The Company uses the straight-line approach to expense recognition.

Select one:

a.$35,000

b.$40,000

c.None of these

d.$25,000

e.$17,500