Appraisal Economics Inc. valued all the outstanding stock options of a national apparel and home goods retailer to facilitate the company’s option exchange. In conjunction with a debt recapitalization and cash dividend on the underlying common stock leading up to its initial public offering, the company cancelled all previously issued stock options and issued new options with lower exercise prices and otherwise identical terms. Appraisal Economics Determined the aggregate value of the options immediately before and after the option exchange. The concluded fair values were used to measure the compensation expense of the option exchange for financial reporting purposes.

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