Reginald bank offered its chief investment officer (cio) 5,000 options to purchase company stock at $5/share on january 1, year 1. the stock was selling at the same price in the public market that day. assume that reginald bank estimates the value of the options on the grant date is $10/share. the vesting period was 50 percent for year 1 and 50 percent for year 2. on december 31, year 2, the stock was worth $7/share, but the cio believed that stock prices were going up; so she waited until december 31, year 3 to exercise all her options and turn around and sell the shares the same day when the stock price was $15/share. if year 1 is 2000, year 2 is 2001, and year 3 is 2002 and the above options are non-qualified stock options (nqos): what is the amount of expense will reginald bank recognize in its income statement for financial reporting in 2000, 2001, and 2002? what is the amount of deduction for reginald bank related to the stock options in 2000, 2001, and 2002? what amount of book-tax differences (btd) will reginald bank have in 2000, 2001, and 2002 related to the stock options? is it favorable or unfavorable? is it temporary or permanent? b. repeat a. parts i.-iii. if instead year 1 is 2014, year 2 is 2015, and year 3 is 2016.

Suppose that fixed costs for a firm in the automobile industry (start-up costs of factories, capital equipment, and so on) are $5 billion and that variable costs are equal to $17,000 per finished automobile. because more firms increase competition in the market, the market price falls as more firms enter an automobile market, or specifically, , where n represents the number of firms in a market. assume that the initial size of the u. s. and the european automobile markets are 300 million and 533 million people, respectively. a. calculate the equilibrium number of firms in the u. s. and european automobile markets without trade. b. what is the equilibrium price of automobiles in the united states and europe if the automobile industry is closed to foreign trade? c. now suppose that the united states decides on free trade in automobiles with europe. the trade agreement with the europeans adds 533 million consumers to the automobile market, in addition to the 300 million in the united states. how many automobile firms will there be in the united states and europe combined? what will be the new equilibrium price of automobiles? d. why are prices in the united states different in (c) and (b)? are consumers better off with free trade? in what ways?