Norton Company is considering two alternative projects. Project 1 requires an initial investment of $800,000 and has a present value of all its cash flows of $2,200,000. Project 2 requires an initial investment of $4,000,000 and has a present value of all its cash flows of $6,000,000. The profitability index for Project 1 is:

Multiple Choice

• 1.50.

• 0.67.

• 2.75.

• 0.36.

• 2.65.