The profitability index is computed by dividing the
a. total cash flows by the initial investment.
b. present value of cash flows by the initial investment.
c. initial investment by the total cash flows.
d. initial investment by the present value of cash flows.
Answer: b. present value of cash flows by the initial investment.
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You wish to deposit $7,000 in an account at the Shylock Bank. The bank pays interest at a nominal annual rate of 10% compounded quarterly. What is the effective interest rate offered by Shylock?
A) 10.38% B) 10.00% C) 9.65% D) 11.21% E) 10.47%
Why is the human tendency to satisfice over the long run of a negotiation relationship
detrimental? A) The satisficing party settles for a mediocre option, or something less than they could otherwise have. B) The satisficing party's aspirations are too high and therefore they push too aggressively during negotiation, creating a feeling of enmity with the other's party. C) The tendency of a person to see what they want when appraising their performance leads people to selectively seek information that confirms what they believe is true. D) Satisficing creates a competitive negotiation which affects the potential for pie-expansion.