Suppose the following two independent investment opportunities are available to Fitz, Inc. The appropriate discount rate is 8.5 percent.

a. Compute the profitability index for each of the two projects.

b. Which project(s) should the company accept based on the profitability index rule?

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Year Project Alpha Project Beta -$2,700 -$4,100 900 1,500 1,300 2,600 3 1,100 3,200