Assume the following information for a capital budgeting proposal with a five-year time horizon:

Initial investment:

Cost of equipment (zero salvage value) $ 365,000

Annual revenues and costs:

Sales revenues $ 300,000

Variable expenses $ 130,000

Depreciation expense $ 50,000

Fixed out-of-pocket costs $ 40,000

Assuming a discount rate of 12%, this proposals profitability index is closest to:

Multiple Choice

A. 1.33.

B. 1.37.

C. 1.28.

D. 1.23.