Question
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 | $2.04 million | 100% |
| B | $0.98 million | 54% |
| C | $1.48 million | 46% |
a. What are the profitability indexes of the projects?
b. What should Fabulous Fabricators do?
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Fundamentals of Corporate Finance
Authors: Berk, DeMarzo, Harford
2nd edition
132148234, 978-0132148238
