The offer from BioGene will be worth more because the company will be worth more. BioGene's value will increase because its earnings will grow at a rate of 50 percent per year and its PE ratio will decline. This will result in a higher valuation for the company in 2022. InterWebs, on the other hand, will only grow at a rate of 20 percent per year. As a result, their valuation will be lower, even though their PE ratio will be higher.

 

The offer from BioGene yields a larger gain. The offer from BioGene yields a larger gain because the company will be worth more in four years. BioGene's value will increase because its earnings will grow at a rate of 50 percent per year and its PE ratio will decline. This will result in a higher valuation for the company in 2022. InterWebs, on the other hand, will only grow at a rate of 20 percent per year. As a result, their valuation will be lower, even though their PE ratio will be higher. This means that the value of Barbara's options will be worth more if she exercises them when the stock price is higher.

 

In addition to these compensation matters what other factors would you suggest Barbara considering in making her decision?

Answer rating: 100% (QA)

As Barbara is evaluating two job offers there are several other factors she should consider before m... View the full answer