I need help with my accounting homework. I've attached the questions.

Located in New York City, Daredevil Solutions manufactures and sells a variety of products used in the superhero industry. Products include body armor, belts, capes, boots, and small, hand-held weapons. The company was started by a lawyer, Franklin Nelson, in 1964. A large majority (75 percent) of the company's common stock is owned by Nelson and his family. In late 2014, Nelson gave up his role as President and control of day to day operations and assumed the position of CEO and chairman of the board. At this time, the company hired Wilson Fisk, formerly a senior vice president of a division of a real estate development company, as its president. Franklin always described himself as a no-nonsense manager \"focused on the 'bottom line.'\" To make sure that Wilson also focused on generating profit, Franklin set a \"stretch target\" of a 15% increase in profit for 2015 (total target profit of $3,674,250 = 1.15 x $3,195,000 profit for 2014). He also structured Wilson's compensation as follows: Base pay = $250,000 Incentive pay = 10% of profit between $3,195,000 and $3,674,250 + 20% of profit greater than $3,674,250. To Franklin's surprise, profit in 2015 was $4,500,000! While Wilson's total compensation was $463,075 (see computation below), Franklin couldn't have been more pleased. \"Hiring Wilson, with his background in business, was the smartest thing I ever did. I know our products, but Wilson knows business practices. If he can generate this kind of profit, why should I object to him getting a significant piece of the pie?\" Base salary 10% of ($3,674,250 - $3,195,000) 20% of ($4,500,000 - $3,674,250) Total compensation $250,000 47,925 165,150 $463,075 Karen Page, Franklin's former associate, is a student with a double major in accounting and finance at the NYU Stern School of Business. She is also an intern at Daredevil Solutions in the accounting department. Karen requested permission to analyze the company's financial statements as part of a class project to try to learn something by investigating the strategies that Wilson used to generate the strong profits shown in 2015. Daredevil Solutions Comparative Income Statements Sales Less: Cost of Sales Gross Margin Research and Development* Selling, General, and Admin. Expense Interest Expense Income before income taxes Income taxes Net Income Comparative Balance Sheets Assets Cash and cash equivalents Accounts Receivable Inventory Prepaid Expenses Total Current Assets Land Building, furniture, and fixtures (net of Acc. Depr) Total non-current assets Total Assets Liabilities Accounts Payable Accrued Liabilities Taxes Payable Total current liabilities Long-term debt Total Liabilities Stockholders Equity Common Stock Retained earnings Total Stockholders equity Total Liabilities and Stockholders Equity * R&D in 2013 = $1,500,000 and in 2012 = $1,400,000 2015 28,256,000 17,236,000 11,020,000 1,300,000 2,797,000 -6,923,000 2,423,000 4,500,000 2014 25,687,000 16,381,000 9,306,000 1,600,000 2,537,000 254,000 4,915,000 1,720,000 3,195,000 2015 2014 1,195,000 4,973,000 3,885,000 47,000 10,100,000 1,342,000 8,238,000 9,580,000 19,680,000 1,286,000 2,568,000 1,902,000 45,000 5,801,000 1,342,000 8,523,000 9,865,000 15,666,000 1,845,000 157,000 980,000 2,982,000 2,982,000 199,000 45,000 49,000 293,000 3,175,000 3,468,000 5,080,000 11,618,000 16,698,000 19,680,000 5,080,000 7,118,000 12,198,000 15,666,000 Here's what Karen concluded based on analysis of the financial statements and other accounting records: 1. Wilson generated additional sales by changing the credit terms from payment due 30 days after sale to payment due 6 months after the sale (interest free) for all approved, credit worthy customers. 2. The company had been operating at approximately 70 percent of available capacity. Wilson greatly increased production to meet the demand generated by allowing customers to pay in 6 months. He also ordered an additional buildup in inventory. According to Wilson, the buildup was needed to deal with large and rush orders. Karen thinks the buildup was an effort to reduce unit costs (the more you produce, the lower the cost per unit because some costs are fixed). 3. Wilson reduced R&D expenditures. 4. Wilson paid off all company debt reducing interest expense. Armed with this information, Karen set up a meeting with her study group at the Stern School to discuss the situation and perform additional analyses. Required: Assume the role of a member of the study group and answer the following questions. 1. Has the existing compensation plan led to potentially value decreasing actions on the part of Wilson? Identify the actions and explain why they are motivated by the existing compensation plan. 2. Suppose that Wilson's compensation had been linked to EVA. Would that have solved any of the problems you identified in question 1? Which one(s), and why? Why, in general, might EVA be a better performance metric than profit? 3. Evaluate performance in fiscal 2014 and 2015 in terms of Economic Value Added (EVA). Assume a weighted average cost of capital of 11% in 2014 and 15% in 2015. Research and development is assumed to have a three-year life beginning with the year incurred. 4. What did Wilson change between 2014 and 2015 that would plausibly explain the increase in the cost of capital assumed in question 3? 5. Do you believe that Wilson deserved the large bonus he received? Explain