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denis23 [38]
3 years ago
9

The owners of a small manufacturing concern have hired a manager to run the company with the expectation that (s)he will buy the

company after five years. The goal of the owners in making this hire is to find the appropriate manager that will increase profits substantially. Compensation of the new manager is a flat salary plus 50% of first $200,000 of profit, and then 5% of profit over $200,000. Purchase price for the company is set as 41 2 times net earnings (profit), computed as average annual profitability (prior to calculation of the managers bonus) over
the next five years.
(a) Does the bonus structure for the manager provide the manager with the appropriate incentive to increase profits beyond the first $200,000 ? Explain briefly.
(b) Is it a good idea to link the purhcase price of the company to the earnings (profit) of the company. Given this linkage, what do you think the manager will try to do?
(c) Does this contract align the incentives of the new manager with the (current)goals of the owners?
Business
1 answer:
Viefleur [7K]3 years ago
8 0

Answer:

sry need points

Explanation:

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Suppose gdp in this country is $800 million. enter the amount for government purchases. national income account value (millions
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Answer:

Therefore government purchases is $300 million

Explanation:

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Sibila, Inc. sells its product for $40. The variable costs are $18 per unit. Fixed costs are $16,000. The company is considering
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Answer:

c. It will increase.

Explanation:

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The results show that break-even point in units will increase from 728 units to  875 units as a result of the changes

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