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Required information Skip to question [ The following information applies to the questions displayed below. ] On January 1 , year 1 , Tyra started
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The following information applies to the questions displayed below.
On January year Tyra started working for Hatch Corporation. New employees must choose immediately between receiving NQOs each NQO provides the right to purchase for $ per share shares of Hatch stock or restricted shares. Hatch's stock price is $ on Tyra's start date. Either form of equitybased compensation will vest in two years. Tyra believes that the stock will be worth $ per share in two years and $ in four years, when she will sell the stock. Tyra's marginal tax rate is percent and her longterm capital gains rate is percent. Assuming that Tyra's price predictions are correct, answer the following questions ignore present value, and use nominal dollars:
Note: List cash outflows as negative amounts. Leave no answers blank. Enter zero if applicable.
a What are the cashflow effects to Tyra in the year she receives the options, in the year the options vest and she exercises the options, and in the year she sells the stock if she chooses the NQOs?
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