Each Year the Human Resources Department in a Large Corporation

question 60

Essay

Each year the human resources department in a large corporation assesses the performance of all of its employees.Each employee is rated for various aspects of his or her job on a 7-point scale where 1 = very unsatisfactory and 7 = satisfactory.The CEO of the company believes that the assessment scores this year are lower than last year's.To examine the validity of this belief she draws a random sample of six employees' scores from last year and another six employees' scores this year.Do the data listed below allow the CEO to conclude at the 5% significance level that her belief is correct?
$$\begin{array}{l}\text { Employess Ratingr Feores }\\\begin{array} { | c c | } \hline \text { This Year } & \text { Last Year } \\\hline 5 & 5 \\6 & 5 \\4 & 3 \\5 & 3 \\5 & 4 \\4 & 3 \\\hline\end{array}\end{array}$$

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Definitions:

Profitability Index

A financial tool used to evaluate the attractiveness of an investment, calculated as the present value of future cash flows divided by the initial investment.

Net Present Value

A valuation method that calculates the worth of a future stream of cash flows by discounting them back to their present value.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments, calculating an annual growth rate.

Profitability Index

A fiscal indicator that evaluates an investment's comparative profitability by calculating the ratio of the present value of future cash inflows to the upfront cost of the investment.