=+Elisa McRae was recently hired as a cost analyst by Medlab Medical Supplies Inc. One of Elisas first assignments was to perform a net present value analysis for a new warehouse. Elisa performed the analysis and calculated a present value index of 0.75. The plant manager, I. M.

Madd, is very intent on purchasing the warehouse because he believes that more storage space is needed. I. M. Madd asks Elisa into his office and the following conversation takes place:

I. M.: Elisa, you’re new here, aren’t you?

Elisa: Yes, sir.

I. M.: Well, Elisa, let me tell you something. I’m not at all pleased with the capital investment analysis that you performed on this new warehouse. I need that warehouse for my produc¬

tion. IfI don’t get it, where am I going to place our output?

Elisa: Hopefully with the customer, sir.

I. M.: Now don’t get smart with me.