Question 4 A.A private college adds a small caf to its building to cater to the needs of its own students. The total cost of the facilities for the caf is $100,000. After a year of operations, the college determines that operating the caf is interfering with its primary business of educating students. A group of enterprising business students offer to purchase the caf facilities for $50,000. The college balks at the idea because it had paid $100,000 for the facilities. At this point, the college spends $10,000 advertising the caf for sale hoping to get an outside buyer willing to pay much more than the students and operate the caf on campus. When no outside offer was forthcoming, the students increased their offer to $55,000. Should the college take the students' offer? Why or why not?(8marks) B. Explain the principal agent problem, and provide two incentives used by corporations to minimize the negative effects on shareholders.(12marks)

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Answer Question 4 A Evaluating the Offer for the Caf Facilities The college is facing a decision regarding the sale of the caf facilities Lets assess ... View the full answer