Compute the profitability index for each of the following two proposals assuming the desired minimum rate of return is 20 per cent. Based on the profitability indexes, which proposal is better?

	Proposal 1	Proposal 2
Initial cash outlay	$ 16,000	$ 10,300
Net cash inflow (after taxes):
First year	10,000	6,000
Second year	9,000	6,000
Third year	6,000	4,000
Fourth year	-0-	2,500