Question: Lawanna Davis graduated from State U with a major in

Lawanna Davis graduated from State U with a major in accounting five years ago. She obtained a position with a well-known professional services firm upon graduation and has become one of their outstanding performers. In the course of her work, she has developed numerous contacts with business firms in the area. One of them, Shasta, Inc., recently offered her a position as head of their Financial Services Division. The offer includes a salary of $50,000 per year, annual bonuses of 1 percent of divisional operating income, and a stock option for 10,000 shares of Shasta stock to be exercised at $15 per share in two years. Last year, the Financial Services Division earned $1,110,000. This year, it is budgeted to earn $1,600,000. Shasta stock has increased in value at the rate of 16 percent per year over the past five years. Lawanna currently earns $65,000.
Advise Lawanna on the relative merits of the Shasta offer.

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  • CreatedSeptember 01, 2015
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