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Hi
I have seen the following question in Kaplan testing.
Company has 180 emplyees and share options are 1000, price at grant date is £3 and period is 3 yrs. you have to work out pl charges for first 2 yrs.Yr1 10 leave and 30 are expected to leave. So I worked out pl charge
as being 180-10-30x £3x 1000 divide by 3yrs as being £140k.The answer in question is £150k as they have not deducted the 10 who left?
They do the same for 2nd yr and only take off expected to leave and NOT ones who have left. I thought I new how to do these and am confused now , please help
Hi
What is normal turnaround for questions to be answered as I need help a.s.ap
Thanks
Hi,
Estimating the number of employees who are going to exercise the option is always tricky, so don’t stress if you make some mistakes as everyone does.
I don’t think that you’ve given me the full information with regards to the question. Based upon the answers I suspect that the question is stating that there are 30 people expected to leave over the three years, so the number who will be there at the end of the vesting period will always be 150. It appears that based on 10 employees leaving each year so far they estimate that overall 30 in total will leave and this estimate hasn’t changed at each reporting date.
The key in any of these questions is to read the information given very carefully and here the care is with regards the 30 expected leavers is the total leavers, and not the leavers over the next few years of the vesting period.
Thanks
Hi sir
Thanks I will re check however it clearly states that 10 left and the estimated for following years is 30 and all questions I have attempted previously to this one always deduct the actual leavers when calculating the liabilty and p & L all charge.
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