Sam Jones is the president of Apollo Finance,a payday lender.The company's proxy statement contains the following description of Mr.Jones' pay package.
Mr.Jones is eligible for an annual incentive bonus equal to 1% of Net Income of the company and is eligible for an additional bonus based upon annual increases in EPS only after earnings exceed 15% over the prior year.The additional bonus is determined as follows:

Assume no change in the number of shares of outstanding stock during the year.
Required:
a.Suppose that Apollo Finance had $75 million of Net Income for the year.How much of a bonus would Mr.Jones receive if the EPS increase for the year was 12%?
b.Suppose that Apollo Finance had $75 million of Net Income for the year.How much of a bonus would Mr.Jones receive if the EPS increase for the year was 28%?

Question

Sam Jones is the president of Apollo Finance,a payday lender.The company's proxy statement contains the following description of Mr.Jones' pay package.
Mr.Jones is eligible for an annual incentive bonus equal to 1% of Net Income of the company and is eligible for an additional bonus based upon annual increases in EPS only after earnings exceed 15% over the prior year.The additional bonus is determined as follows:
 
Assume no change in the number of shares of outstanding stock during the year.
Required:
a.Suppose that Apollo Finance had $75 million of Net Income for the year.How much of a bonus would Mr.Jones receive if the EPS increase for the year was 12%?
b.Suppose that Apollo Finance had $75 million of Net Income for the year.How much of a bonus would Mr.Jones receive if the EPS increase for the year was 28%?

Quizplus · Accepted Answer

The Answer of Sam Jones is the president of Apollo Finance,a payday lender.The company's proxy statement contains the following description of Mr.Jones' pay package.
Mr.Jones is eligible for an annual incentive bonus equal to 1% of Net Income of the company and is eligible for an additional bonus based upon annual increases in EPS only after earnings exceed 15% over the prior year.The additional bonus is determined as follows:
 
Assume no change in the number of shares of outstanding stock during the year.
Required:
a.Suppose that Apollo Finance had $75 million of Net Income for the year.How much of a bonus would Mr.Jones receive if the EPS increase for the year was 12%?
b.Suppose that Apollo Finance had $75 million of Net Income for the year.How much of a bonus would Mr.Jones receive if the EPS increase for the year was 28%?

Sam Jones Is the President of Apollo Finance,a Payday Lender