Capital Rationing

question 81

Multiple Choice

Capital rationing. Mick's Pub's is considering expanding the number of restaurants it owns. If it decides on the expansion, it will invest $2,300,000, and the NPV of the project is $900,000. What is the profitability index of the project?

• A) 0.39
• B) 1.00
• C) 1.39
• D) 2.39

---

Definitions:

Milgram's Studies

Milgram's studies were groundbreaking experiments conducted by Stanley Milgram in the 1960s to explore obedience to authority, demonstrating that people are willing to follow directions from an authority figure even to the extent of inflicting pain on another person.

Electric Shocks

A form of physical stimulation or punishment involving the application of electrical current to the body.

Diffusion of Responsibility

A sociopsychological phenomenon where individuals are less likely to take action or feel a sense of responsibility in the presence of a large group of people.

Bystanders

Individuals who are present at an event or incident but do not take part.