Suzanne Received 20 ISOs (Each Option Gives Her the Right

question 96

Essay

Suzanne received 20 ISOs (each option gives her the right to purchase 20 shares of stock for $12 per share)at the time she started working when the stock price was $14 per share.Three years later,when the share price was $23 per share,she exercised all of her options.How much cash will Suzanne need on the exercise date?

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Definitions:

Income Tax Expense

The accounting term for income taxes due to federal, state, and local governments within a given fiscal period.

Cash Flow

The complete volume of cash flowing into and exiting a corporation, with a significant impact on its liquidity.

Operating Activities

Day-to-day business functions involved in running a company, typically reflected in the cash flow statement.

Dividends

Payments made by a corporation to its shareholder members, typically from profits or reserves.