On 1 July 2012 York Ltd (A Start-Up Biotech Company)grants

On 1 July 2012 York Ltd (a start-up biotech company) grants its senior manager a choice of receiving cash equivalent of 100 000 shares or 120000 shares.The grant is conditional upon the senior manager working for the entity for 3 years but if the share alternative is chosen,the grant vests after two years.At grant date the entity's share price is $12.50.The entity does not expect to pay dividends in the next 3 years.After taking into account the effects of post-vesting transfer restrictions,the entity estimates the grant-date fair value of the share alternative to be $12. What is the fair value of the equity component of the compound instrument?

A) $10 000
B) $20 000
C) $190 000
D) $300 000

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