Refer to Problem 6-A4.

1. Suppose the “decision model” favored by top management consisted of a comparison of a 3-year accumulation of wealth under each alternative. Which alternative would you choose? Why?

(Accumulation of wealth means cumulative increase in cash.)

2. Suppose the “performance evaluation model” emphasized the net income of a subunit, such as a division, each year rather than considering each project, one by one. Which alternative would you expect a manager to choose? Why?

3. Suppose the same quantitative data existed, but the “enterprise” was a city and the “machine” was a computer in the treasurer’s department. Would your answers to the first two parts change? Why?