Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

The owners of a small manufacturing concern have hired a manager to run the company with the expectation that he will buy the company after five years. Compensation of the new vice president (manager) is a flat salary plus 75% of the first $150,000 of profit, and then 10% of profit over $150,000. Purchase price for the company is set as 4.5 times earnings(profit), computed as average annual profitability over the next five years. Does this contract align the incentives of the new vice president with the goals of the owners?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M948814

Have any Question? 


Related Questions in Microeconomics

Question in june of 2009 the us house of representatives

Question: In June of 2009 the U.S. House of Representatives passed H.R. 2454, which introduced a "cap-and-trade" system to reduce carbon emissions associated with global warming. The federal government will issue a fixed ...

Question please thoroughly and completely explain the

Question: Please thoroughly and completely explain the differences between transaction demand for money and the asset demand for money, and how they work together to determine the total demand for money. The response mus ...

Question suppose you were hired by the worcester college

Question: Suppose you were hired by the Worcester College Student Government Association (SGA) to estimate how much WorcesterCollege students spend on economics text books in a semester. Write an econometric model which ...

Question mary has forgotten to put rental expenses on the

Question: Mary has forgotten to put rental expenses on the budget statement this month. Comment on the appropriateness of her action under each of the following scenarios: i) Mary owns the shop , Mary budgets a rental ex ...

Question the northern community of assiniboine narrows has

Question: The northern community of Assiniboine Narrows has a population of 12,000. It has one medical clinic with three doctors, each working 40 hours per week. Each doctor sees four patients per hour. The clinic would ...

Question you should draw a graph that depicts the situation

Question: You should draw a graph that depicts the situation below and use your picture to answer the questions. Assume that wages and prices are sticky and that we start at a long-run equilibrium. Assume that at this in ...

Question consider a firm that is considering marketing its

Question: Consider a firm that is considering marketing its innovation in multiple countries. What factors should this firm consider in formulating its protection strategy? The response must be typed, single spaced, must ...

Question 1 explain and describe rational business pricing2

Question: 1. Explain and describe rational business pricing. 2. How does differentiating gasoline affect rational business pricing? The response must be typed, single spaced, must be in times new roman font (size 12) and ...

Question - for the following questions write whether the

Question - For the following questions write whether the statements are true or false and give full justification for your answer. (a) For a given income level, it is not possible to have both good 1 and good 2 as luxury ...

Question - market demand - in gas pump south dakota every

Question - Market Demand - In Gas Pump, South Dakota, every Buick owner's demand for gasoline is 20 - 5p for p less than or equal to 4 and 0 for p > 4. Every Dodge owner's demand is 15 - 3p for p less than or equal to 5 ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As