What Do Employees Receive Under an Employee Stock Bonus Plan

question 38

Multiple Choice

What do employees receive under an employee stock bonus plan?

• A) shares at no cost to themselves
• B) cash value of phantom shares
• C) a bonus equivalent to the increase in their share value
• D) free financial advice on stocks

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Definitions:

Sunk Cost

A cost that has already been incurred and cannot be recovered.

Stand-Alone Principle

A method of evaluating investment projects as if they were the only project the company is undertaking, assessing their viability on their individual merits.

Depreciation Tax Shield

The reduction in income tax that results from the allowance for depreciation, which can be considered a non-cash expense that decreases taxable income.

Equivalent Annual Cost

Equivalent annual cost is a financial analysis tool used to compare the cost effectiveness of different projects or investments with differing lifespans by calculating their equivalent cost per year.