Problem $8-25$ Profitability Index versus NPV $($LO$3)20$ Consider projects A and B with the following cash flows: oolnts $\backslash$begin$\{$tabular$\}\{$ccccc$\}$ & $\backslash ($ C$\_\{0\}\backslash )$ & $\backslash ($ C$\_\{1\}\backslash )$ & $\backslash ($ C$\_\{2\}\backslash )$ & $\backslash ($ C$\_\{3\}\backslash )\backslash \backslash$ A & $\backslash (-\backslash$$ $40\backslash )$ & $\backslash (+\backslash$$ $24\backslash )$ & $\backslash (+\backslash$$ $24\backslash )$ & $\backslash (+\backslash$$ $24\backslash )\backslash \backslash$ B & $-65$ & $+34$ & $+34$ & $+34\backslash \backslash \backslash$hline $\backslash$end$\{$tabular$\}\backslash (\backslash$mathbf$\{$a $-1\}\backslash ).$ What is the NPV of each project if the discount rate is $10\backslash \%?($Do not round intermediate calculations. Round your answers to $\backslash (\backslash$mathbf$\{2\}\backslash )$ decimal places.$)$ a$-2.$ Which project has the higher NPV$?$ b$-1.$ What is the profitability index of each project? $($Do not round intermediate calculations. Round your answers to $\backslash (\backslash$mathbf$\{2\}\backslash )$ decimal places.$)$ b$-2.$ Which project has the higher profitability index? c$.$ Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? d$.$ Which project is most attractive to a firm that is limited in the funds it can raise? Answer is complete but not entirely correct. $\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|$l$|\}\backslash$hline & & Project A & Project B $\backslash \backslash \backslash$hline $\backslash$begin$\{$tabular$\}\{$l$\}$ a$-\backslash \backslash 1.\backslash$end$\{$tabular$\}$ & NPV of each project if the discount rate is $10\backslash \%$ & $\backslash$$ $19\mathrm{.}68$ & $\backslash$$ $19\mathrm{.}55\backslash \backslash \backslash$hline $\backslash$begin$\{$tabular$\}\{$l$\}$ a$-\backslash \backslash 2.\backslash$end$\{$tabular$\}$ & Which project has the higher NPV$?$ & $\backslash$multicolumn$\{2\}\{|$r$|\}\{$Project A $\}\backslash \backslash \backslash$hline $\backslash$begin$\{$tabular$\}\{$l$\}$ b$-\backslash \backslash 1.\backslash$end$\{$tabular$\}$ & Profitability index of each project & $\backslash$begin$\{$tabular$\}\{$l$\}\backslash$$ $\backslash \backslash 1\mathrm{.}49\backslash$end$\{$tabular$\}$ & $\backslash \backslash \backslash$hline $\backslash$begin$\{$tabular$\}\{$l$\}$ b$-\backslash \backslash 2.\backslash$end$\{$tabular$\}$ & Which project has the higher profitability index? & $\backslash$multicolumn$\{2\}\{|$c$|\}\{$Project A$\}\backslash \backslash \backslash$hline c$.$ & Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? & $\backslash$multicolumn$\{2\}\{|$c$|\}\{$Both$\}\backslash \backslash \backslash$hline d$.$ & Which project is most attractive to a firm that is limited in the funds it can raise? & $\backslash$multicolumn$\{2\}\{|$c$|\}\{$Project A$\}\backslash \backslash \backslash$hline $\backslash$end$\{$tabular$\}$