You Are the Manager of Your Division at a Large

question 14

Multiple Choice

You are the manager of your division at a large technology firm, and have been waiting to get approval to hire a new person. You have someone in mind: your long-time friend and college roommate, who you know would be a terrific fit with your team. But you are also aware that the company wants to increase its diversity, especially with regard to women.  You worry about this, since your team is all male, and adding a woman would change the dynamics considerably. You've now advertised the new position, as required, and the two best candidates are your friend, and a Latina woman you have never met before. Neither candidate has met your team. Of the following, which would be the best decision? ​

• A)hire your friend; you know he'll fit with the current team ​
• B)hire the woman; the firm will be happy that you've improved diversity
• C)have both candidates meet with your team, each one separately, and get their input on the candidates; then decide based on their preference
• D)have both candidates meet with your team, each one separately, and get their input on the candidates; then make the decision on your own, objectively

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Definitions:

Cost Of Capital

The rate of return required by a capital provider—debt or equity—for investing in a company.

Crossover Rate

Crossover Rate is the point at which two or more investment alternatives have the same net present value, used in capital budgeting to compare the desirability of projects.

WACC

A firm’s capital expenses are determined through the Weighted Average Cost of Capital, which proportionally weighs each category of capital.

NPV

Net Present Value - a financial metric used to evaluate the profitability of an investment or project, taking into account the time value of money by discounting future cash flows.