If the required return is 11%, what is the profitability index for each of these projects? Which project will the company choose if it applies the profitability index decision rule? (5 marks)

1. Parkallen Inc. has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$29,000 -$29,000 1 14,400 4,300 2 12,300 9,800 3 9,200 15,200 4 5,100 16,800