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prob012 - Problem 12(Past exam question 40 minutes(Text Ch...

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Problem 12 (Past exam question: 40 minutes) (Text: Ch. 3) Ms. Mogul has been offered a new job as Vice-President of Marketing with Ganz Ltd., a Canadian-controlled private corporation. In addition to the basic salary and commissions, a number of benefits have been offered as indicated below. (a) The remuneration package includes a stock option to purchase 10,000 previously unissued fully paid shares of Ganz Ltd. at $10 per share. The current FMV is $25 per share. Ms. Mogul would be expected to exercise half of the option immediately to show her confidence in the company, which plans to go public in the near future. (13 minutes) (b) Under a corporate policy applicable to senior executives, Ganz Ltd. will loan Ms. Mogul the $50,000 required to exercise half of the option at no interest, repayable at $10,000 per annum for 5 years and evidenced by a bona fide note. Any outstanding balance would be due in full on termination of employment. (9 minutes) (c) Under a corporate policy applicable to senior executives, Ganz Ltd. will also loan Ms. Mogul $250,000 at 3% interest to purchase a home in Toronto where Ganz
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