Wednesday
April 16, 2014

Homework Help: Accounting

Posted by Anna on Thursday, June 14, 2012 at 9:05pm.

I need help in working this problem...please help...
Gaines Company recently initiated a post audit program. To motivate employees to take the program seriously, Gaines established a bonus program.Managers receive a bonus equal to 10 percent of the amount by which actual net present value exceeds the projected net present Value.Victor Holt, manager of the North Western Division, had an investment proposal on
his desk when the new system was implemented. The investment opportunity required a $250,000 initial cash outflow and was expected to return cash inflows of $90,000 per year for the next five years.Gainesí desired rate of return is 10 percent. Mr. Holt immediately reduced the estimated cash inflows to $70,000 per year and recommended accepting the project.

a. Assume that actual cash inflows turn out to be $91,000 per year. Determine the amount of Mr. Holtís bonus if the original computation of net present value were based on $90,000 versus 70,000.
b. Speculate about the long-term effect the bonus plan is likely to have on the company.
c. Recommend how to compensate managers in a way that discourages gamesmanship.

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

Probability-Math - Please forgive me for posting this for the 3rd time but I ...
Calculus - I've been working on this problem for while, and I keep getting the ...
Accounting - I have almost completed my assignment, but am stuck on this ...
Management Accounting - well i try to solve this problem but it look so ...
math help - Thank you for helping me with the last problem Reiny and Bosnian. ...
Principles of Accounting - I need help understanding my Accounting 205 class. ...
Accounting 212 (Managerial) - Could someone please assist in this matter. I'm ...
accounting - I attend penn foster i an working on chapter 1 example number ...
Trig - Find an equation for the hyperbola described. Foci at (-4,0) and (4,0); ...
accounting..please help - can you help me please for this solving problem below...

Search
Members