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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 Use of

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

Contract

NPV

Use of Facility

A

$2.01

million

100%

B

$1.05

million

54%

C

$1.46

million
46%

a. What are the profitability indexes of the projects?

b. What should Fabulous Fabricators do?

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