Question
a) Your morning meeting is with Hyram Tech -- the CEO of the Info-SuperHiway Corporation (ISH). In the meeting, Hy reveals several aspects about ISH.
a) Your morning meeting is with Hyram Tech -- the CEO of the Info-SuperHiway Corporation (ISH). In the meeting, Hy reveals several aspects about ISH. First, he has been able to politic for a tax advantage from the government under the guise that the development of an information superhighway is a benefit to the national security of the U.S. The deal he has cut with the government is that the firm will not have to pay any corporate taxes. In addition, all security holders of ISH will be exempt from paying taxes on any income earned from investments in the firm. Second, he hands you an article from "Executive Compensation Magazine" which lists ISH as one of the top ten firms in America in terms of designing executive pay schedules which tie managerial compensation to stock performance. That is, Hy's own wealth has been made, through his compensation contract, very sensitive to the wealth of shareholders. Third, he describes a research project that ISH scientists are now working on. This project entails designing a more efficient communication facility than is currently available. Hy expects that the results of this research will be ready in about two years. If successful, the future costs of developing the information superhighway will be greatly reduced. However, the implementation of the new design will be quite costly. Nonetheless, the savings from the new design, if it works, will certainly be enough to compensate for the hefty initial investment.
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