Suppose the following two independent investment opportunities are available to Relax, Inc. The appropriate discount rate is 9 percent.

Year Project Alpha Project Beta

0 $2,700 $4,300

1 1,400 900

2 1,300 2,700

3 1,000 3,100

a. Compute the profitability index for each of the two projects. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)

Profitability Index

Project Alpha:

Project Beta:

b. Which project should the company accept based on the profitability index rule?

Project Alpha or Project Beta