! Required information Problem 12-37 (LO 12-2) (Static) [The following information applies to the questions displayed below.] On January 1, year 1, Tyra started working for Hatch Corporation. New employees must choose immediately between receiving 7 NQOs (each NQO provides the right to purchase for $5 per share 10 shares of Hatch stock) or 50 restricted shares. Hatch's stock price is $5 on Tyra's start date. Either form of equity-based compensation will vest in two years. Tyra believes that the stock will be worth $15 per share in two years and $25 in four years, when she will sell the stock. Tyra's marginal tax rate is 32 percent and her long-term capital gains rate is 15 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. Problem 12-37 Part c (Static) c. What are the cash-flow effects to Tyra in the year she receives the restricted stock, in the year the stock vests, and in the year she sells the stock if she makes an 83(b) election? Grant date Vesting date Sale date Total Net Cash Flow
! Required information Problem 12-37 (LO 12-2) (Static) [The following information applies to the questions displayed below.] On January 1, year 1, Tyra started working for Hatch Corporation. New employees must choose immediately between receiving 7 NQOs (each NQO provides the right to purchase for $5 per share 10 shares of Hatch stock) or 50 restricted shares. Hatch's stock price is $5 on Tyra's start date. Either form of equity-based compensation will vest in two years. Tyra believes that the stock will be worth $15 per share in two years and $25 in four years, when she will sell the stock. Tyra's marginal tax rate is 32 percent and her long-term capital gains rate is 15 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. Problem 12-37 Part c (Static) c. What are the cash-flow effects to Tyra in the year she receives the restricted stock, in the year the stock vests, and in the year she sells the stock if she makes an 83(b) election? Grant date Vesting date Sale date Total Net Cash Flow
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 10P
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Required information
Problem 12-37 (LO 12-2) (Static)
[The following information applies to the questions displayed below.]
On January 1, year 1, Tyra started working for Hatch Corporation. New employees must choose immediately between
receiving 7 NQOs (each NQO provides the right to purchase for $5 per share 10 shares of Hatch stock) or 50 restricted
shares. Hatch's stock price is $5 on Tyra's start date. Either form of equity-based compensation will vest in two years. Tyra
believes that the stock will be worth $15 per share in two years and $25 in four years, when she will sell the stock. Tyra's
marginal tax rate is 32 percent and her long-term capital gains rate is 15 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.
Problem 12-37 Part c (Static)
c. What are the cash-flow effects to Tyra in the year she receives the restricted stock, in the year the stock vests, and in the year she
sells the stock if she makes an 83(b) election?
Grant date
Vesting date
Sale date
Total
Net Cash Flow](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9e9e94ef-9ee0-4646-8800-0e596e07e717%2Fc6dbbdf8-4f61-4e9d-a869-71638e2a1e0e%2Fwjdqfzc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
Required information
Problem 12-37 (LO 12-2) (Static)
[The following information applies to the questions displayed below.]
On January 1, year 1, Tyra started working for Hatch Corporation. New employees must choose immediately between
receiving 7 NQOs (each NQO provides the right to purchase for $5 per share 10 shares of Hatch stock) or 50 restricted
shares. Hatch's stock price is $5 on Tyra's start date. Either form of equity-based compensation will vest in two years. Tyra
believes that the stock will be worth $15 per share in two years and $25 in four years, when she will sell the stock. Tyra's
marginal tax rate is 32 percent and her long-term capital gains rate is 15 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.
Problem 12-37 Part c (Static)
c. What are the cash-flow effects to Tyra in the year she receives the restricted stock, in the year the stock vests, and in the year she
sells the stock if she makes an 83(b) election?
Grant date
Vesting date
Sale date
Total
Net Cash Flow
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