Geri Smart graduated from Troy University five years ago with a Masters degree inaccounting.She obtained a position with a well-known professional services firm upongraduation and has become of its rising stars. Geri has developed a number of professional contacts in her work, both with clients and with outside companies. One of these companies, Busby Manufacturing Company, recently offered Geri a position as head of their financial services division. The offer includes a salary of $50,000 per year, annual bonuses of one percent of divisional operating income, and a stock option for 10,000 shares of Busby stock, to be exercised in two years at the current price of $15 per share. Last year, the financial services division earned $1,110,000. This year, it is budgeted to earn $1,600,000. Busby stock has increased in value at the rate of 16 percent per year over the past five years. Geri currently earns $65,000 per year.
You are to advise Geri on the relative merits and downsides of the Busby offer.
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