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On October 1, 2016, Farmer Fabrication issued stock options for 450,000 shares to a division manager. The options have an estimated fair value of $10 each. To provide additional incentive for managerial achievement, the options are not exercisable unless divisional revenue increases by 4% in three years. Suppose that after one year, Farmer estimates that it is not probable that divisional revenue will increase by 4% in three years. |
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What is the revised estimate of the total compensation? |
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