company can hire a competent manager for a guaranteed salary of 475,000. She argued, "Why pay 515,000 when we can probably hire the same person for 475,000 ?" Read the Requirement 1. What factors would affect Tamura International's choice of employment contract? Include a discussion of the pros and cons of each proposed contract. International of this risk is = The choice be based on whether the incentive under the bonus plan is likely to be worth the cost the risk. Another factor to consider is that highly qualified managers seek contracts with a bonus because they would be Because Tamura International receives of every 10 of extra profit generated, attracting a highly qualified manager to be advantageous. Requirement 2. Why is the expected compensation more with the bonus plan than with the straight salary? If the expected compensation did not differ, managers would prefer a contract with risk. Extra compensation to offset the added risk