Michelle Has Been Working at AdCo for Five Years

question 51

Multiple Choice

Michelle has been working at AdCo for five years.The company recently hired a new college graduate to work in a position very similar to Michelle's position.In a casual conversation with the new hire,Michelle discovers that the new employee is making $4,000 more annually than she is.What might Michelle's reaction be?

• A) Michelle may feel that the psychological contract has been broken.
• B) Michelle may feel that her job description no longer applies.
• C) Michelle may feel that her supervisor is not empathetic.
• D) Michelle may feel that her person-job fit cannot be improved.
• E) Michelle may feel that she has benefitted from the Hawthorne effect.

---

Definitions:

WACC Calculation

The process of determining a company's Weighted Average Cost of Capital, incorporating the costs of equity, debt, and any other forms of financing.

Semiannually

Occurring twice a year, generally used in the context of payments, interest accruals, or reports.

CAPM

Capital Asset Pricing Model, a theory that describes the relationship between systematic risk and expected return for assets.

Target Capital Structure

The mix of debt, equity, and other financing sources a company aims to use to fund its operations and growth.