In his book, the new economics for industry, government, education, dr. w. edwards deming indicates that ranking people, salesmen, teams, divisions; reward at the top, punishment at the bottom; the so-called merit system is a farce. apparent performance is actually attributed mostly (98%) to the system that the individual works in, not the individual him/herself. the following equation will you to understand the futility of attempting to rank people. let 'x' be the contribution of some individual in a company, '(yx)' the effect of the system on the individual's performance. then suppose we have some number for the individual's performance such as 8 mistakes during the year, or making sales of $8,000,000. then: x + yx = 8your mission for this discussion question is to solve this equation for x and tell us how you did it. this is exactly what managers are doing when giving the individual a performance evaluation. the manager has no idea what the 'y' factor is, the impact of the system on the individual's performance; it is not measured. managers are just guessing what the 'y' factor is.

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?