1. Which of the following comes closest to profitability index (PI) of a project that requires an initial investment of $800 and produces a single cash flow of $1,200 at the end of year 4 if the required rate of return is 5%?

A. 0.92

B. 1.23

C. 1.66

D. 2.05

2.A sports game company with current sales of $400,000 does not expect any growth in sales for the next two years. The company, however, anticipates that expenses, currently at $200,000, will increase to $210,000 next year and to $220,500 the year after. Assuming a tax rate of 34%, determine the firms cash flow in year two. Assume annual depreciation is $20,000.

	A.	$112,360
	B.	$125,270
	C.	$145,890
	D.	$178,330