If you can please help me answer the attached, that would be great! :)

QUESTION THREE Sidney, the head of new product development, has decision rights over what new product to develop. Once Sidney has decided which product to develop, her effort level will impact the success of the product. She can choose either New Product A or New Product Project B. The cash flows and present value of the cash flows with low and high effort on Sidney's part are shown below for both projects. High effort improves the cash flows by 10% versus low effort. The present value of the cash flows is calculated with a 7% discount rate which is assumed to be the shareholder's discount rate. New Product A: Cash Flows in Millions of Dollars Cash Flows Present Value of Cash Flows Year Low Effort High Effort Low Effort High Effort 1 10.00 11.00 9.35 10.28 2 15.00 16.5 13.10 14.41 15.00 16.50 12.24 3.47 5.00 5.50 3.81 1.20 5.00 5.50 3.56 3.92 Tota 42.07 46.28 New Product B: Cash Flows in Millions of Dollars Cash Flows Present Value of Cash Flows Year Low Effort High Effort Low Effort High Effort 1 5.00 5.50 4.67 W N 5.14 5.00 5.50 4.37 4.80 10.00 11.10 8.16 8.98 UT . 20.00 22.0 15.26 16.78 20.00 22.00 14.26 15.69 Total 46.72 51.39 The company shareholders would like Sidney to (1) choose the new product with the highest present value of cash flows and (2) work hard. New Product B has a higher present value than New Product A. Sidney has specific knowledge. She knows the new product present values depicted in the above tables but senior management does not. Senior management laments that basing Sidney's annual bonus on the level of cash flows from the new product will induce her to provide high effort, but might not induce her to launch the correct new product. Explain why basing Sidney's annual bonus on the level of cash flows from the new product might not lead her to choose New Product B