When you hired Chris to manage your business, you agreed to pay him a bonus of 10 percent of profits at the end of each year. The company now has a choice between two projects (it can take on only one of them). Project A will generate profits of $55,500 per year, and detailed financial calculations show that it will increase the value of the firm by $128,600. Project B will generate profits of $45,500 per year but will increase the firms value by $131,100. Which project is Chris likely to choose?

		Annual Bonus
Project A		$
Project B		$

Chris is likely to prefer Project AProject B.

Which project would you, the owner of the firm, prefer?

Owner of the firm would prefer Project AProject B.