Companies such as Tucan need to undertake valuing share option plans with careful consideration and consultation. Select the item below that should be considered when valuing share option plans.
Assessing the sensitivity of the value to changes in key assumptions
Determining the valuation outputs
Obtaining approval of management
When valuing share option plans, like Tucan's, one crucial aspect to consider is:
Assessing the sensitivity of the value to changes in key assumptions
This step is essential because it helps understand how the value of the share options is impacted by variations in key input parameters, such as the risk-free interest rate, volatility, expected life of the option, and the dividend yield. Assessing this sensitivity provides insights into the robustness of the valuation and the potential range of outcomes, which is vital for making informed decisions and disclosures.
