Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the

following contracts:

a$.$ What are the profitability indexes of the projects?

b$.$ What should Fabulous Fabricators do$?$

a$.$ What are the profitability indexes of the projects?

The profitability index for contract $A$ is $.($Round to two decimal places.$)$

Data table

$($Click on the following icon $$ in order to copy its contents into a spreadsheet.$)$

Part $2$

Professor Wendy Smith has been offered the following$$ opportunity: A law firm would like to retain her for an upfront payment of $$$$50$ comma $000.$ In$$ return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment$$ arrangement, the firm would pay Professor Smith$\text{'}$s hourly rate for the eight hours each month. Smith$\text{'}$s rate is $$$$540$ per hour and her opportunity cost of capital is $12\%$ per year. What does the IRR rule advise regarding the payment$$ arrangement? $($Hint$$: Find the monthly rate that will yield an effective annual rate of $12\%.)$ What about the NPV$$ rule?