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

Multiple Choice

Miller's is considering a 2-year expansion project that will require $410,000 up front.The project will produce cash flows of $358,000 and $98,000 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? Why or why not?

A) Yes;because the PI is 1.03
B) Yes;because the PI is .97
C) Yes;because the PI is .94
D) No;because the PI is 1.03
E) No;because the PI is .97