Consider the following two mutually exclusive projects:

Year Cash Flow $($A$)$ Cash Flow $($B$)$

$0$$ $350,000$$ $50,000$

$145,00024,000$

$265,00022,000$

$365,00019,500$

$4440,00014,600$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Whichever project you choose, if any, you require a $15\%$ return on your investment.

e$-1.$ What is the profitability index for each project? $($Do not round intermediate calculation. Round the final answers to $3$ decimal places.$)$

Profitability Index

Project A

Project B

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

e$-2.$ If you apply the profitability index criterion, which investment will you choose?

multiple choice $5$

$$ Project A

Project B