Under Its Executive Stock Option Plan, M Corporation Granted Options

Multiple Choice

Under its executive stock option plan, M Corporation granted options on January 1, 2013, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2015 (the vesting date) . The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures were anticipated; however, unexpected turnover during 2014 caused the forfeiture of 5% of the stock options. Ignoring taxes, what is the effect on earnings in 2014?

A) $18.5 million.
B) $18 million.
C) $20 million.
D) $19 million.