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Profitability Index Calculation for Investment Evaluation : A company is evaluating two mutually exclusive investment projects. Project A has an initial investment of $500,000 and

Profitability Index Calculation for Investment Evaluation: A company is evaluating two mutually exclusive investment projects. Project A has an initial investment of $500,000 and a profitability index of 1.2, while Project B has an initial investment of $800,000 and a profitability index of 1.5. Calculate the net present value (NPV) for each project and discuss how the profitability index aids in investment decision-making.

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