Firenze Freight plc owns a hotel on the Italian Riviera for the use of employees (including the Board of Directors) when on annual leave. The hotel is also open to members of the public. Members of the Board are studying a number of projects to improve the facilities that the hotel provides. A total of 10m is available to fund these projects. Details of the projects, which are independent of each other, are given below:

Project	Investment m	Profitability Index
Install swimming pool	2.0	1.3
Refurbish and extend restaurant	3.0	1.2
Extend hotel accommodation	4.0	1.5
Install gymnasium	1.5	0.9
Add theme bar	2.5	1.6
New golf course	3.8	1.4

Required:

Identify the portfolio of projects that should be undertaken, justifying your choice, and stating any reservations that you may have.