CONSOLIDATED WATER CO. LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Expressed in United States dollars) 16. Stock Compensation (continued) In calculating the fair value for these options under FAS 123 the Black-Scholes model was used with the following weighted average assumptions: Options granted with an exercise price below market price on the date of grant: Options granted with an exercise price above market price on the date of grant: Weighted average fair value per share under FAS 123 for shares issued during the year below market price on the date of grant: Under current laws of the Cayman Islands, there are no income, estate, corporation, capital gains or other taxes payable by the Company. The Company has received a tax exemption with respect to their Belize operations. The exemption expires in 2006 and is renewable in accordance with the provisions of the license (Note 3). 17. Taxation 2000 1999 1998 Number of Weighted average fair value per share Number of Weighted average fair value per share Number of Weighted average fair value per share  shares US$  shares US$ shares US$ Employee Share Plan 2,279 $7.00 9,768 $5.83 7,590 $4.58 Directors Share Plan 6,889 $7.13 2,400 $6.75 - - Overall weighted average 9,168 $7.09 12,168 $6.01 7,590 $4.58 2000 1999 1998 Exercise price $7.1 - - Grant date market value $7.0 - - Risk free interest rate 5.0% - - Expected life 3.2 years - - Expected volatility 62.57% - - Expected dividend yield 4.57% - - 2000 1999 1998 Exercise price $6.70 $4.37 $2.68 Grant date market value $6.97 $6.98 $7.02 Risk free interest rate 6.56% 5.75% 4.75% Expected life 3.0 years 2.8 years 0.4 years Expected volatility 62.64% 72.55% 29.32% Expected dividend yield 4.59% 3.46% 2.28%