Volatility n/a 23% 25% 25% 22% 22% Dividend yield n/a 3.6% 3.9% 3.1% 3.2% 4.0% Additional information with respect to stock option activity is as follows Weighted Average Number of Exercise Options Price (In millions) December 29, 2012 Granted Exercised Cancelled and forfeited Expired December 28, 2013 Granted Exercised Cancelled and forfeited Expired December 27, 2014 Granted Exercised Cancelled and forfeited Expired December 26, 2015 Options exercisable as of 202.8 $20.20 $22.99 (65.0) $18.76 (3.0) $22.58 (1.9) $22.56 153.0 $21.10 0.6 $25.34 (63.7) $19.87 (2.7) $23.70 (9.9) $27.00 77.3 $21.30 20.1 (21.9 $20.34 (1.1) $23.23 (0.1) $20.87 54.2 $21.65 December 28, 2013 December 27, 2014 December 26, 2015 1115 $20.25 54.7$20.29 43.8 $21.07 (a) What did Intel expense for share-based compensation for 2014? $1.1 billion (a) What did Intel expense for share-based compensation for 2014? $1.1billion How many options did Intel grant in 2014? 600 thousand shares Compute the fair value of all options granted during 2014. (Round your answer to two decimal places.) 2.17million Why do the fair value of the option grants and the expense differ? The expense in 2014 is the cost of current and prior years' option grants that vest in the current year.v The expense is net of tax and the fair value of the options is pretax. The expense includes both the value of the options and the opportunity cost reflecting the higher price at which the shares could have been sold. The expense is related to the current market price of the stock and the options are granted at historical costs. Mark 1.00 out of 1.00 b) Intel used the Black-Scholes formula to estimate fair value of the options granted each year. How did the change in volatility from 2013 to 2014 affect share-based compensation in 2014? What about the change in risk-free rate? The decrease in the volatility estimate did not change share-based compensation expense and the decrease in the risk-free rate estimate decreased compensation expense. The decrease in the volatility estimate increased share-based compensation expense and the decrease in the risk-free rate estimate increased compensation expense. The decrease in the volatility estimate increased share-based compensation expense and the decrease in the risk-free rate estimate decreased compensation expense The decrease in the volatility estimate did not change share-based compensation expense and the (b) Intel used the Black-Scholes formula to estimate fair value of the options granted each year. How did the change in volatility from 2013 to 2014 affect share-based compensation in 2014? What about the change in risk-free rate? The decrease in the volatility estimate did not change share-based compensation expense and the decrease in the risk-free rate estimate decreased compensation expense. The decrease in the volatility estimate increased share-based compensation expense and the decrease in the risk-free rate estimate increased compensation expense. OThe decrease in the volatility estimate increased share-based compensation expense and the decrease in the risk-free rate estimate decreased compensation expense OThe decrease in the volatility estimate did not change share-based compensation expense and the decrease in the risk-free rate estimate increased compensation expense Mark 1.00 out of 1.00 c) How many options were exercised during 2015 21.9 million shares Estimate the cash that Intel received from its employees when these options were exercised. (Round your answer to one decimal place.) 445.5 million (d) What was the intrinsic value per share of the options exercised in 2015? (Hint: Assume that Intel's stock price was $32.19, on average, during fiscal 2015.) $21. x per share If employees who exercised options in 2015 immediately sold them, what "profit" did they make from the shares? (Round your answer to two decimal places.) 15.99 X million (d) What was the intrinsic value per share of the options exercised in 2015? (Hint: Assume that Intel's stock price was $32.19, on average, during fiscal 2015.) $21 x per share If employees who exercised options in 2015 immediately sold them, what "profit" did they make from the shares? (Round your answer to two decimal places.) 15.99 x million (e) The tax benefit that Intel will receive on the options exercised is computed based on the intrinsic value of the options exercised. Estimate Intel's tax benefit from the 2015 option exercises assuming a tax rate of 37%. (Round your answer to two decimal places.) $5.92x million f What was the average exercise price of the 0.1 million options that expired in 2015? 0.2 X per share Explain why employees might have let these options expire without exercising them. (Hint: Assume that Intel grants options at-the-money.) Employees might have felt that the stock price would increase in the future and preferred to wait to exercise their options. If the stock price was less than the strike price of the options, it would not be economically rational for employees to exercise these options. Employees might have left the company. Employees might have chosen to receive their benefit in the form of compensation. Mark 1.00 out of 1.00 Volatility n/a 23% 25% 25% 22% 22% Dividend yield n/a 3.6% 3.9% 3.1% 3.2% 4.0% Additional information with respect to stock option activity is as follows Weighted Average Number of Exercise Options Price (In millions) December 29, 2012 Granted Exercised Cancelled and forfeited Expired December 28, 2013 Granted Exercised Cancelled and forfeited Expired December 27, 2014 Granted Exercised Cancelled and forfeited Expired December 26, 2015 Options exercisable as of 202.8 $20.20 $22.99 (65.0) $18.76 (3.0) $22.58 (1.9) $22.56 153.0 $21.10 0.6 $25.34 (63.7) $19.87 (2.7) $23.70 (9.9) $27.00 77.3 $21.30 20.1 (21.9 $20.34 (1.1) $23.23 (0.1) $20.87 54.2 $21.65 December 28, 2013 December 27, 2014 December 26, 2015 1115 $20.25 54.7$20.29 43.8 $21.07 (a) What did Intel expense for share-based compensation for 2014? $1.1 billion (a) What did Intel expense for share-based compensation for 2014? $1.1billion How many options did Intel grant in 2014? 600 thousand shares Compute the fair value of all options granted during 2014. (Round your answer to two decimal places.) 2.17million Why do the fair value of the option grants and the expense differ? The expense in 2014 is the cost of current and prior years' option grants that vest in the current year.v The expense is net of tax and the fair value of the options is pretax. The expense includes both the value of the options and the opportunity cost reflecting the higher price at which the shares could have been sold. The expense is related to the current market price of the stock and the options are granted at historical costs. Mark 1.00 out of 1.00 b) Intel used the Black-Scholes formula to estimate fair value of the options granted each year. How did the change in volatility from 2013 to 2014 affect share-based compensation in 2014? What about the change in risk-free rate? The decrease in the volatility estimate did not change share-based compensation expense and the decrease in the risk-free rate estimate decreased compensation expense. The decrease in the volatility estimate increased share-based compensation expense and the decrease in the risk-free rate estimate increased compensation expense. The decrease in the volatility estimate increased share-based compensation expense and the decrease in the risk-free rate estimate decreased compensation expense The decrease in the volatility estimate did not change share-based compensation expense and the (b) Intel used the Black-Scholes formula to estimate fair value of the options granted each year. How did the change in volatility from 2013 to 2014 affect share-based compensation in 2014? What about the change in risk-free rate? The decrease in the volatility estimate did not change share-based compensation expense and the decrease in the risk-free rate estimate decreased compensation expense. The decrease in the volatility estimate increased share-based compensation expense and the decrease in the risk-free rate estimate increased compensation expense. OThe decrease in the volatility estimate increased share-based compensation expense and the decrease in the risk-free rate estimate decreased compensation expense OThe decrease in the volatility estimate did not change share-based compensation expense and the decrease in the risk-free rate estimate increased compensation expense Mark 1.00 out of 1.00 c) How many options were exercised during 2015 21.9 million shares Estimate the cash that Intel received from its employees when these options were exercised. (Round your answer to one decimal place.) 445.5 million (d) What was the intrinsic value per share of the options exercised in 2015? (Hint: Assume that Intel's stock price was $32.19, on average, during fiscal 2015.) $21. x per share If employees who exercised options in 2015 immediately sold them, what "profit" did they make from the shares? (Round your answer to two decimal places.) 15.99 X million (d) What was the intrinsic value per share of the options exercised in 2015? (Hint: Assume that Intel's stock price was $32.19, on average, during fiscal 2015.) $21 x per share If employees who exercised options in 2015 immediately sold them, what "profit" did they make from the shares? (Round your answer to two decimal places.) 15.99 x million (e) The tax benefit that Intel will receive on the options exercised is computed based on the intrinsic value of the options exercised. Estimate Intel's tax benefit from the 2015 option exercises assuming a tax rate of 37%. (Round your answer to two decimal places.) $5.92x million f What was the average exercise price of the 0.1 million options that expired in 2015? 0.2 X per share Explain why employees might have let these options expire without exercising them. (Hint: Assume that Intel grants options at-the-money.) Employees might have felt that the stock price would increase in the future and preferred to wait to exercise their options. If the stock price was less than the strike price of the options, it would not be economically rational for employees to exercise these options. Employees might have left the company. Employees might have chosen to receive their benefit in the form of compensation. Mark 1.00 out of 1.00