Homerun Sports 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	$2.02 million	100%
B	$0.96 million	52%
C	$1.54 million	48%

a. What are the profitability indices of the projects?

b. What should Homerun Sports do?

a. 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 Homerun Sports do?(Select the best choice below.)

A.

Since it has the capacity to do both B and C and NPVB+NPVC is greater than NPVA, it should do both B and C.

B.

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

C.

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

D.

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