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 $ 1.97 million 100 % B $ 1.01 million 57 % C $ 1.48 million 43 % a. What are the profitability indexes of the projects? b. What should Fabulous Fabricators do?

b. What should Fabulous Fabricators do?(Select the best choice below.)

A.

Since the NPV of A is the largest, it should choose A.

B.

It should take the two projects with the highest profitability indexes: C and A.

C.

Since the profitability index for C is the largest, it should choose C.

D.Since it has the capacity to do both B and C and

NPV Subscript Upper B Baseline plus NPV Subscript Upper CNPVB+NPVC

is greater than

NPV Subscript Upper ANPVA,

it should do both B and C.