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| On January 1, year 2, Pall Corp. granted stock options to key employees for the purchase of 40,000 shares of the company’s common stock at $25 per share. The options are intended to compensate employees for the next 2 years. The options are exercisable within a 4-year period beginning January 1, year 3, by grantees still in the employment of the company. The market price of Pall’s common stock was $25 per share at the date of grant. The value of each option under the Black-Scholes model was $8.00. No stock options were terminated during the year. What amount should Pall charge to compensation expense for the year ended December 31, year 2? A. $0 B. $ 80,000 C. $320,000 D. $160,000 |