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Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: Contract NPV $2.00 million
Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: Contract NPV $2.00 million $1.00 million $1.50 million Use of Facility 100% 60% 40% B C 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.) The profitability index for contract B is (Round to two decimal places.) The profitability index for contract C is (Round to two decimal places.) b. What should Fabulous Fabricators do? (Select the best choice below.) O A. Since it has the capacity to do both B and C and NPVB + NPV is greater than NPVA, it should do both B and C. O B. It should take the two projects with the highest profitability indexes: C and A. O c. Since the NPV of A is the largest, it should choose A
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