Consider the following two mutually exclusive projects:

(a) Which project has the higher profitability index at i = 7%?
(b) Which project would you choose if you can raise an unlimited amount of funds in financing either project at 7%? Use the profitability index rule.

Project A1 Project A2 Investment $750,000 $1,000,000 Required at n=0 $100,000 $200,000 $200,000 $100,000 $100,000 $200,000 3 $240,000 $300,000 4 $200,000 $300,000 $180,000 $250,000 $250,000 $180,000 $180,000 $150,000 $180,000 $100,000 9. $180,000 $50,000 10 670