Risk Simulator Real Options SLS title= Modeling Toolkit PEAT ESO Valuation ROV BizStats
Risk Simulator Runtime ROV Compiler ROV Extractor ROV Optimizer ROV Dashboard ROV Webmodels
Quantitative LSRO SDK rov-visual-modeler

EMPLOYEE STOCK OPTIONS VALUATION

Risk Simulator
Real Options SLS title=
Modeling Toolkit
PEAT
ESO Valuation
ROV BizStats
Risk Simulator Runtime
ROV Compiler
ROV Extractor
ROV Compiler
ROV Dashboard
ROV Webmodels

The figure shows the result as $14.69, the answer that FASB uses in its example. The forfeiture rate of 3% in FASB’s example is applied outside of the model to discount for the quantity reduced over time. The software allows the ability to input the forfeiture rates (pre- and post-vesting) inside or outside of the model. In this specific example, we set forfeiture rate to zero in the figure below and the option quantity is adjusted outside, just as FASB does, in A91:

“The number of options expected to vest is estimated to be 821,406 (900,000 × .973).”