Suppose all plant and division managers were paid only a fixed salaryno other incentives or bonuses. a.
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Suppose all plant and division managers were paid only a fixed salary—no other incentives or bonuses.
a. Describe the agency problems that would appear in capital investment decisions.
b. How would tying the managers’ compensation to EVA alleviate these problems?
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a When paid a fixed salary without incentives to act in shareholders best interest managers often ac...View the full answer
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Related Book For 
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
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