Kaijsa Received 20 NQOs (Each Option Gives Her the Right

question 65

Essay

Kaijsa received 20 NQOs (each option gives her the right to purchase 30 shares of stock for $8 per share)from her employer at the time she started working when the stock price was $9 per share.Now that the share price is $18 per share,she intends to exercise all of her options.If Kaijsa holds the shares for two years and sells them when the market price is $25,what is the amount of the deduction and tax savings her employer will receive (assume the employer's marginal tax rate is 30 percent)?

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Definitions:

Labor

The work performed by humans which is often measured in terms of hours or productivity and is a fundamental factor of production.

Market Wage

The prevailing pay rate for work of a given nature in a specific market or industry.

Labor Supply

The total hours that workers are willing and able to work in a given period, often influenced by factors like wages, working conditions, and social norms.

Capital

Financial assets or the financial value of assets, such as cash and goods, used to generate wealth through investment or production.