Red Company Is a Calendar-Year U

Multiple Choice

Red Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2018, the company had issued 40,000 executive stock options permitting executives to buy 40,000 shares of stock for $25. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting) . The fair value of the options is estimated as follows: What is the compensation expense related to the options to be recorded in 2019?

A) $48,000.
B) $96,000.
C) $128,000.
D) $140,000.