Miller's Is Considering a 2-Year Expansion Project That Will Require

question 31

Multiple Choice

Miller's is considering a 2-year expansion project that will require $398,000 up front.The project will produce cash flows of $361,000 and $114,000 for Years 1 and 2,respectively.Based on the profitability index (PI) rule,should the project be accepted if the discount rate is 12 percent? Should it be accepted if the discount rate is 17 percent?

• A)Yes;Yes,because the PI is 1.2
• B)Yes;No,because the PI is 0.98
• C)No;Yes,because the PI is 0.98
• D)No;No,because the PI is 1.2
• E)Yes;Yes,because the PI is 1.19

---

Definitions:

Heart Disease

A broad category of illnesses that affect the heart's structure and function.

Weight Gain

An increase in body weight over time.

Sleep Deprivation

Sleep deprivation occurs when an individual gets less than the needed amount of sleep, leading to physical, emotional, and cognitive impairments.

Verbal Learning

The process by which individuals acquire, retain, and recall information and concepts through words, either spoken or written.