XYZ company used the PKT (plumbing knowledge test) to hire 20 employees and a total of 90 applicants took the test. For each individual, the cost of administering the test is $30 to cover the printing of the test, scoring of the test, paying the proctor, etc. The 20 people hired had an average score of 86 on the on the test whereas the average score of the 90 applicants was 68 with a standard deviation of 24. The standard deviation of the revenue generated in dollars per year (from the company record) is $8,200. The validity coefficient of PKT for dollar revenue generated is 0.48.

Based on the information, the company is interested in finding out the return on investment as a result of using PKT.

Calculate the expected dollar gain from the selection. (Hint: You need to convert or calculate the Z score for the people selected. Refer back to the chapter on HR measurement).

What will be your advice to the company in terms of using the PKT? Explain and also show your calculations