Wren Co. grants 100,000 stock options to key employees on Jan. 1, 2016. These options allow the employees to buy the stock for $30 per share, beginning on Jan. 1, 2018.

The market price of the stock is $30 on Jan. 1, 2016. The par value per share is $3. These options have a fair value of $4 each and are tax deductible by Wren. Wren's income tax rate is 30%. On June 1, 2018, all options are exercised when the stock price is $42 per share.