Without referring to your notes.... statements, currently, referring, director, employee

sabaruch

A firm grants employee stock options to a director. The director receives 100,000 options with a strike price of $10 per share. The shares currently trade at $8 in the market. The firms financial controller has valued these options using a BSM model and the model is telling him the options are worth $4 each.

FASB has issued guidance on how to record the granting of these options on the firms financial statements.

How would they be recorded before, and after FASB issued this guidance.

Rasec

1.synergy so strategic merger
2.ebit +3m+100k=5.1m
3.24.11%

economicz

can someone show the calculation of the discount? thanks.

bbtomato

DLOC = control premium / (1 + control premium)
DLOC = .12 / 1.12 = 10.7%

Total discount = 1- (1 - DLOC)*(1 - DLOM)
= 1 - 0.893*.85
= 24.11%


Also, janakisri, i just bunged it into COGS as there was no other suitable place to put it

liquidity

why zero-coupon bonds is of particular importance when analyzing capacity to repay for a high yield issuer???

WarrenB1

neilzuo Wrote:
-------------------------------------------------------
> why zero-coupon bonds is of particular importance
> when analyzing capacity to repay for a high yield
> issuer???

It is because over the life of the bond more liability accrues with PIK and zero-coupon securities. As this accrues and the increased liability is incorporated into the debt structure it will negatively affect the firms ability to repay senior debt.

Uranus08

A True
B

Revenues: $25,000,000
COGS: $17,000,000

(-3 synergy)

Gross Profit: $8,000,000

Operating expenses: $2,900,000
(-100k ceo pay)

EBIT: $5,100,000
Taxes at 40% $2,040,000
Net Income: $3,060,000

3 28.8%

Kapie

no wait the discount is 24.12%

and they are a strategic buyer

my brain hurts



Edited 1 time(s). Last edit at Friday, April 30, 2010 at 08:38AM by kurupt1.

zephyranalyst

no, it is depreciating.

Cap rate = (R-G)
R=12
so G = -4

since (R-G)=16

CP

profil

Yes, PIK is payment in kind.

You're on the right track, but what am I trying to determine?