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Show work, please! Employee Stock Options Year -4 Year -3 Year-2 Year -1 Year 0 Outstanding options beginning balance Options granted Options exercised Options forfeited..

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Employee Stock Options Year -4 Year -3 Year-2 Year -1 Year 0 Outstanding options beginning balance Options granted Options exercised Options forfeited.. Outstanding options ending balance. 292.5 105.9 - 85.8 15.4 297.3 107.7 -87.2 15.6 302.1 109.4 - 88.6 15.9 307.0 111.2 -90.0 -16.2 312.0 113.0 -91.5 - 16.4 297.3 302.1 307.0 312.0 317.1 5.0% 5.0% 5.0% 5.0% 5.0% Percent forfeited each year before vesting Weighted average date value per unit Options grantedvalue at grant date Options exercisedvalue at grant date.. Options exercised-value at vesting date Current stock price. $ 9.52 $ 7.04 $ 9.55 $36.61 $ 10.53 $ 7.78 $ 10.56 $ 40.49 $ 11.64 $ 8.61 $ 11.68 $ 44.78 $ 12.88 $ 9.52 $ 12.92 $ 49.53 $ 14.24 $ 10.53 $ 14.29 $ 54.77 Revenue Total labor costs. $9,869 $4,714 $11,053 $ 5,299 $12,380 $ 5,956 $13,865 $ 6,695 $15,529 $ 7,525 a. Use the expense ratio-based, grant date value-based, and exercise date value-based forecasting methods to measure the company's potential forecast drivers for its stock-based compensation (employee stock options) for Year 1, assuming the employee stock options vest annually over three years and will be exer- cised in three years. Also, assume the appropriate way to scale stock-based compensation is (a) revenue and (b) cash labor costs. b. Forecast the stock-based compensation effect on free cash flows in Year 0 based on the revenues and cash labor costs in Year 0 (see Exhibit P12.1). Employee Stock Options Year -4 Year -3 Year-2 Year -1 Year 0 Outstanding options beginning balance Options granted Options exercised Options forfeited.. Outstanding options ending balance. 292.5 105.9 - 85.8 15.4 297.3 107.7 -87.2 15.6 302.1 109.4 - 88.6 15.9 307.0 111.2 -90.0 -16.2 312.0 113.0 -91.5 - 16.4 297.3 302.1 307.0 312.0 317.1 5.0% 5.0% 5.0% 5.0% 5.0% Percent forfeited each year before vesting Weighted average date value per unit Options grantedvalue at grant date Options exercisedvalue at grant date.. Options exercised-value at vesting date Current stock price. $ 9.52 $ 7.04 $ 9.55 $36.61 $ 10.53 $ 7.78 $ 10.56 $ 40.49 $ 11.64 $ 8.61 $ 11.68 $ 44.78 $ 12.88 $ 9.52 $ 12.92 $ 49.53 $ 14.24 $ 10.53 $ 14.29 $ 54.77 Revenue Total labor costs. $9,869 $4,714 $11,053 $ 5,299 $12,380 $ 5,956 $13,865 $ 6,695 $15,529 $ 7,525 a. Use the expense ratio-based, grant date value-based, and exercise date value-based forecasting methods to measure the company's potential forecast drivers for its stock-based compensation (employee stock options) for Year 1, assuming the employee stock options vest annually over three years and will be exer- cised in three years. Also, assume the appropriate way to scale stock-based compensation is (a) revenue and (b) cash labor costs. b. Forecast the stock-based compensation effect on free cash flows in Year 0 based on the revenues and cash labor costs in Year 0 (see Exhibit P12.1)

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