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Your firm needs to downsize one of its divisions and is tasking you with offering buyouts to two of the five non-managerial employees in the
- Your firm needs to downsize one of its divisions and is tasking you with offering buyouts to two of the five non-managerial employees in the division. The manager of that division has given you the information in the table below based on her assessment of the annual present value of each employees current wages, productivity, alternatives (which implicitly incorporates time before retirement).
- Based on the information in the table and optimal buyout theory, which two employees will you offer buyouts to and how much will you offer each of them? Show your work.
| Name | PV(wages) | PV(productivity) | PV(alternative) |
| Kaylee | $120,000 | $100,000 | $102,000 |
| Jayne | $80,000 | $45,000 | $70,000 |
| River | $390,000 | $360,000 | $320,000 |
| Malcolm | $300,000 | $340,000 | $280,000 |
| Zo | $185,000 | $165,000 | $166,000 |
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Accounting
Authors: Warren S. Carl
23rd Edition
0324555865, 978-0324555868
