You are analyzing a project and have prepared the following data:

YearCash flow

0-

$192,700

1

$53,200

2

$77,600

3

$51,000

4

$26,00

Required payback period

3.5 years

Required AAR

8.25 percent

Required return

10.50 percent

Based on the profitability index of _____ for this project, you should _____ the project.

• 1.08; reject
• 0.87; accept
• 1.02; accept
• 0.87; reject
• 1.02; reject