A firm is considering three projects with the following cash flows:

Project X:

• Initial investment: $8,000
• Year 1: $2,000
• Year 2: $2,000
• Year 3: $4,000
• Year 4: $5,000

Project Y:

• Initial investment: $10,000
• Year 1: $3,000
• Year 2: $3,000
• Year 3: $3,000
• Year 4: $3,000

Project Z:

• Initial investment: $7,000
• Year 1: $1,500
• Year 2: $2,000
• Year 3: $2,500
• Year 4: $3,000

a) Compute the NPV for each project at a discount rate of 9%. b) Determine the profitability index for each project. c) Which project should be undertaken if only one can be selected?