Costcutters Corp. is considering 3 projects, A, B, and C. The cash flows for each project are shown in the table below. If the cost of capital is 16%, these projects are independent of each other but the company has only $40,000 to invest, which project(s) should the company invest in and why? (Hint: use the capital rationing/profitability index criteria)

Year	Project A: CF	Project B: CF	Project C: CF
0	-40,000	-40,000	-40,000
1	13,000	7,000	19,000
2	13,000	10,000	16,000
3	13,000	13,000	13,000
4	13,000	16,000	10,000
5	13,000	19,000	7,000

	1.	A only, as it has a profitability index of 6.41% and the capital is limited
	2.	B only, as it has a pprofitability index of 0.81% and the capital is limited
	3.	C only, as it has a profitability index of 13.64% and the capital is limited
	4.	A and C, as both have a positive profitability index