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19. Why would you accept a salary of $10,000 less from a company in exchange for stock options? Then, assume you are granted options to buy 10,000 shares of stock from a startup company for $10 per share. They have a four year vesting period. At the end of year 1 the price of the stock is $30 per share and it is $80 at the end of year 4. How much can you earn f you exercise options in year 1 and year 4. Show your work.

19. Why would you accept a salary of $10,000 less from a company in exchange for stock options? Then, assume you are granted options to buy 10,000 shares of stock from a startup company for $10 per share. They have a four year vesting period. At the end of year 1 the price of the stock is $30 per share and it is $80 at the end of year 4. How much can you earn f you exercise options in year 1 and year 4. Show your work.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Please show me how to calculate earnings from the stock options with the scenario below.

19. Why would you accept a salary of $10,000 less from a company in exchange for stock options? Then, assume you are granted options to buy 10,000 shares of stock from a startup company for $10 per share. They have a four year vesting period. At the end of year 1 the price of the stock is $30 per share and it is $80 at the end of year 4. How much can you earn if you exercise options in year 1 and year 4. Show your work.
Transcribed Image Text:19. Why would you accept a salary of $10,000 less from a company in exchange for stock options? Then, assume you are granted options to buy 10,000 shares of stock from a startup company for $10 per share. They have a four year vesting period. At the end of year 1 the price of the stock is $30 per share and it is $80 at the end of year 4. How much can you earn if you exercise options in year 1 and year 4. Show your work.
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