A Company Is Screening Ideas for New Services A) Service #1 or #2
B) Service #3 or #4

question 21

Multiple Choice

A company is screening ideas for new services.Five alternative service ideas are being considered.Management identified four criteria and weighted them as follows: A = 30,B = 10,C = 20,and D = 40.They have also come up with scored values for the five alternatives and the four criteria as shown following.Management has decided that if an alternative has less than a total scored value of 600,it should automatically be rejected.Use the preference matrix technique to determine which idea should be accepted.
$$\begin{array} { c } \quad\quad\quad\quad\quad { \text { Alternatives } } \\\begin{array} { | c | c | c | c | c | c | } \hline \text { Criterion } & 1 & 2 & 3 & 4 & 5 \\\text { A } & 8 & 5 & 3 & 7 & 5 \\\text { B } & 7 & 3 & 6 & 6 & 4 \\\text { C } & 2 & 4 & 5 & 3 & 3 \\\text { D } & 4 & 5 & 2 & 3 & 8\end{array}\end{array}$$

• A) Service #1 or #2
• B) Service #3 or #4
• C) Service #5
• D) None

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Definitions:

Real Interest Rate

The rate of interest an investor expects to receive after allowing for inflation, reflecting the true cost of borrowing and the real yield on an investment.

Purchasing Power

A currency's value measured by the volume of goods or services purchasable with one monetary unit.

Bank Account

A financial arrangement made with a banking institution where funds can be deposited for safekeeping, which can include various types such as savings, checking, and deposit accounts.

Nominal Interest Rate

The interest rate before adjustment for inflation, representing the face value of financial transactions.