Hazel Received 34 NQOs (Each Option Gives Her the Right

question 34

Essay

Hazel received 34 NQOs (each option gives her the right to purchase 10 shares of stock for $9 per share)at the time she started working, when the stock price was $16 per share. Now that the share price is $22 per share, she intends to exercise all of her options. How much cash will Hazel need on the exercise date to exercise the stock option?

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Definitions:

Prepaid Insurance

An asset account that represents insurance premiums paid in advance, which are expensed over the period the insurance coverage pertains to.

Accounts Receivable

Funds that customers owe to a company for products or services provided but not yet compensated for.

Accounts Payable

Money owed by a company to its creditors for goods or services that have been received but not yet paid for.

Cash

Money in the form of coins or banknotes, especially that which is available for transactions and accounting purposes.