ZuoTi.Pro
Question

The owners of a small manufacturing concern have hired a vice president to run the company...

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

1. Please PLOT the annual compensation of the vice president as a function of annual profit.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

It is given that compensation of the new vice president is a flat salary plus 75% of the first $150,000 profit, and then 10% of profit over $150,000. Let the flat salary be L, M be profit between $1 and $150,000 and N be profit over $150,000. Annual compensation of the vice president as a function of annual profit shall be L; for annual profit less than $0; L + (M x 75%); for annual profit between $1 and $150,000; L+ (M x 75%) + (N x 10%); for annual profit over $150,000. Vice Presidents Annual compensation =

0 0
Add a comment
Know the answer?
Add Answer to:
The owners of a small manufacturing concern have hired a vice president to run the company...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • The owners of a small manufacturing concern have hired a vice president to run the company with the expectation that he will buy the company after five years. Compensation of the new vice president is...

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

  • The owners of a small manufacturing concern have hired a vice president to run the company...

    The owners of a small manufacturing concern have hired a vice president to run the company with the expectation that he will buy the company after five years. For the first $150,000 of profit, the vice president's compensation is a flat annual salary of $50,000 plus 60% of company profits. Beyond the first $150,000 in profits, the vice president's compensation is the salary he receives at $150,000 profit plus 20% of company profits in excess of $150,000. On the following...

  • expectation that he will buy the company after five years. Compensation of the new vice president...

    expectation that he will buy the company after five years. Compensation of the new vice president is a flat salary plus 75% of the first $150,000 profit, and then 10% of profit over $150,000. Purchase price for the company is set at 4.5 times earnings (profit), computed as average annual profitability over the next five years. a. Plot the annual compensation of the vice president as a function of annual profit. b. Assume the company will be worth $10 million...

  • Rex and Knight are the owners of the Modern Processing Company and the Qldway Manufacturing Company,...

    Rex and Knight are the owners of the Modern Processing Company and the Qldway Manufacturing Company, respectively. These companies manufacture and sell the same prod and competition between the two owners has always been friendly. Cost and profit data have been freely exchanged. Uniform selling prices have been set by market conditions. Rey and Knight differ markedly in their management thinking. Operations at Modern are hig mechanized, and the direct labor force is paid on a fixed-salary basis. Oldway uses...

  • Susan Thomas is the vice president for human resources at National Products, a manufacturing company with...

    Susan Thomas is the vice president for human resources at National Products, a manufacturing company with 500 employees. The company has an opening for a general manager in one of its product divisions, and the president asked Susan to review the backgrounds of three department managers who are interested in being promoted to this position. She is expected either to recommend one of the three internal candidates or to begin recruitment of external candidates. The internal candidates are Charley Adams,...

  • You have just been hired as the new Director of Human Resources at a mid-sized company...

    You have just been hired as the new Director of Human Resources at a mid-sized company of 48 employees. The company’s name is Florida Wireless, which is an authorized agent for Verizon Wireless. Florida Wireless has 5 retail locations throughout Central Florida. The stores are all very busy. Customer wait times are usually very long. Customer satisfaction surveys indicate poor service. Turnover is high for sales/customer service. Even though the stores are busy, store managers are not making the sales...

  • Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president...

    Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department. One of the major revenue-producing...

  • Investment Evaluation Analysis Widget Company is considering upgrading its manufacturing equipment. The Vice-President of Production has...

    Investment Evaluation Analysis Widget Company is considering upgrading its manufacturing equipment. The Vice-President of Production has identified three possible actions Widget could take to accomplish the upgrade, though none is required. One option would upgrade their current equipment and the other two options would replace the existing equipment with purchases of new equipment. The review committee has asked you to review each of the options to identify relevant cost data and to prepare a schedule comparing the three options to...

  • Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president...

    Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the years, the company expanded into manufacturing and is now a reputable manufacturer of various electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company’s finance department. One of the major revenue-producing items manufactured by...

  • Simon Teguh is considering investing in a vending machine operation involving 20 vending machines located in...

    Simon Teguh is considering investing in a vending machine operation involving 20 vending machines located in various plants around the city. The machine manufacturer reports that similar vending machine routes have produced a sales volume ranging from 600 to 800 units per machine per month. The following information is made available to Teguh in evaluating the possible profitability of the operation. An investment of $45,000 will be required, $9,000 for merchandise and $36,000 for the 20 machines. The machines have...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT