1. what is cogs for 2023?

2. what is the cogm for 2023?

3. what is the pre-tax net income for 2021?

4. what is the NPV of hiring the new employee over the years 2021 through 2023 from the firm's perspective? recall that the business has taxable income elsewhere such that there is tax credit if the reported income is less than 0.

5. is it in the best interest of the firm to hire the new employee? yes or no

6. what is the npv of the manager's bonus over the first three years of the new hire (project) if the manager's bonus is based on 10% of the annual profits of the division after tax and the manager is penalized for 10% of any losses?

7. is it in the best interest of the manager to hire the employee? yes or no

8. assume that the manager intends to retire at the end of 2021. recall that the managers bonus is based on 10% of annual profits of the division after tax and the manager is penalized for 10% of any losses?

You are the manager of a consulting service. You have come across a potential employee that you believe will add value to the firm by attracting and serving more clients. The firm has given you the flexibility to add this employee to the staff. However, your bonus is based on full absorption after-tax firm performance. You expect the new employee to bring in the following revenues and associated incremental costs: Year 2021 2022 2023 100 125 100 75 125 125 $200 $200 $200 Number of "jobs" started Number of "jobs" completed Variable cost per "job" Selling and Administrative costs for the year New employee salary (Directly related to "jobs") Selling price per "job" $10.000 $10,000 $10,000 $175,000 $175,000 $175,000 $2,000 $2,000 $2,000 All costs are applied to the jobs when they are started (including the new employee salary). The revenues are not earned (the job is not sold) until the job is complete. Assume that the new employee salary is a direct input for the "jobs", but does not vary with the number of jobs" (it is like a fixed overhead). This section is bold because the timing is very important. The consulting service uses full absorption costing for both book and tax purposes. The "inventory system" is first in first out (FIFO). The discount rate for the firm is 12% and the tax rate is 30%. Assume that all costs (including salary and taxes) are paid in cash at the end of the year in which they occur; all costs are paid when the job is started. However, the clients pay their fees in cash at the end of the year in which the job is completed. Assume that the business has taxable income elsewhere such that there is tax credit if the reported income is less than 0 (there is a "positive" cash flow for the tax credit from negative income at the same rate; for example income of -$1000 yields a tax cash savings of $300, and after Tax income of -$700). When necessary, discount all cash flows to the beginning of the year 2021. Note that all cash paid and received in 2021 must be discounted 1 period, all cash paid and received in 2022 must be discounted 2 periods, and so on