Good Morning Sir,
Thank you for your help so far!
According to one of the MCS suggested answers establishing the value of these financial instruments will require some complex calculations based on estimates.
When I was doing F2, share option calculation didn't seem that difficult:
number of shares x estimated number of employees remaining x fair value of equity instruments at grant date x pro rata for years.
What it is in real life that makes this valuation "a complex calculation"?
Thank you
CIMA Forums
share price effect on WACC
I am really sorry for some reason the title of the question is wrong. I mean to type: share option fair value valuation
8y ago#2Hi,
Glad you're finding everything helpful so far. Keep up the hard work!
The complexity lies in the calculation of the fair value of the option itself. In our exams we are given the figure but in reality we need to use complex option pricing models (Black-Scholes).
Don't worry this won't be tested and you'll be given the far value of the option.
Thanks
Chris
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