Questions $5$ and $6.$

Schmidt Electronics offered an incentive stock plan to its employees. On January $1,$ Year $1,$ options were granted for $80,000$$$1$ par common shares. The exercise price equals the $$6$ market price of the common stock on the grant date. The options cannot be exercised before January $1,$ Year $4,$ and expire on December $31,$ Year $5.$ Each option has a value of $$3$ based upon an option pricing model. No entry is made at the date of the grant.

$5.$ What is the total compensation cost for this plan?

a$.$ $$80,000$

b$.$ $$160,000$

c$.$ $$240,000$

d$.$ $$480,000$Questions $5$ and $6.$

Schmidt Electronics offered an incentive stock plan to its employees. On January $1,$ Year $1,$ options were granted for $80,000$$$1$ par common shares. The exercise price equals the $$6$ market price of the common stock on the grant date. The options cannot be exercised before January $1,$ Year $4,$ and expire on December $31,$ Year $5.$ Each option has a value of $$3$ based upon an option pricing model. No entry is made at the date of the grant.

$5.$ What is the total compensation cost for this plan?

a$.$ $$80,000$

b$.$ $$160,000$

c$.$ $$240,000$

d$.$ $$480,000$