The Following Information Relates to Questions

question 10

Multiple Choice

The following information relates to questions
Viola Ltd has granted each of its 10 senior executives a choice between receiving a cash payment equivalent to 1000 shares or receiving 1200 share. The grant is conditional on the completion of three years’ service with the company. If the share alternative is chosen, the shares must be held for two years after vesting date. At grant date the company’s share price is £25 per share. At the end of years 1, 2 and 3 the share price is £27, £28 and £30 respectively. The company does not expect to pay dividends in the next three years. After taking into account the effect of post-vesting transfer restrictions the company estimates the grant-date fair value of the share alternative is £24 per share.
-What is the fair value of the cash alternative?

• A) £240 000
• B) £250 000
• C) £288 000
• D) £300 000

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Definitions:

Rheumatoid Arthritis

A chronic autoimmune condition causing inflammation, pain, and deformity in the joints.

Rotator Cuff Lesions

Injuries to the group of muscles and tendons that stabilize the shoulder joint, resulting in pain, weakness, and reduced range of motion.

Muscle Spasms

Sudden, involuntary contractions or seizures of muscles that can cause pain or discomfort.

Medial And Lateral Epicondyle

Bony prominences found on the distal end of the humerus, important in the attachment of forearm muscles.