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What is the amount of deferred compensation expense

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Reference no: EM131802977

Shafer Corporation (a nonpublic company) established an employee stock option plan on January 1, 2011. The plan allows its employees to acquire 20,000 shares of its $5 par value common stock at $70 per share, when the market price is $75. The options may not be exercised until five years from the grant date. The risk-free interest rate is 6%, and the stock is expected to pay dividends of $3 annually. The fair value of a similar option at the grant date is $6.40. What is the amount of deferred compensation expense that should be recorded in year one?

Reference no: EM131802977

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