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Pratt is reedy to graduate and leave Coliege Park: His future empioyer (Ferndale Corporation) offers the following four compensation packages from which Pratt may choose.

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Pratt is reedy to graduate and leave Coliege Park: His future empioyer (Ferndale Corporation) offers the following four compensation packages from which Pratt may choose. Pratt will start wotking for Ferndale on January 1 , year 1 Ascume that the restricted stock is 1,000 shares that trade at $5 per share on the grant date (January 1, year 1 . shares are expected to be worth $10 per share on the vesting date at the end of year 1 and no acyb) election is made. Assume that the NQOS (700 options) each allows the employee to purchase to shares ar $5 exercise price. The stock trades at $5 per share on the grant date (January 1, year 1) and is expected to be worth 510 per share on the vesting date at the end of year 1, and the options are exerclsed and sold at the end of the year. Also assume that pratt spends on averoge $3.000 on health-related costs that will be covered by insurance if the had coverage or is an aher-tax expense if he isn't covered by insurance (treat this as a cash ousfow). Assume that Pratrs marginal tax rate is 35 percent. fignore Fica taxes and time value of money considerations). completed Tox Foms to your computer and then uplond it here by clicking "dilowse." Next, click "Save

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