When mangers expect to leave a firm in the near future, they can place less weight on what is best for the company. This can lead to the horizon problem. A divisional manger, John James, expects to retire in three years. John is paid a fixed salary plus 10 percent of his divisions profits. Make the unrealistic assumption that John cares only about cash compensation. He can spend $200,000 on process improvements this year and that will yield $125,000 of cost savings for each of the following four years. Use Excel and show all workuse formulas where usefuldo not just key in answers. Required: Illustrate the case flows for seven years (similar to pp. 131). Should John James accept the project; why? What are the short-term consequences of rejection of this project. Illustrate the case flows for the new manager for years 4-7 if the project is accepted.