The Matterhorn Corporation is trying to choose between the following two mutually exclusive design projects:

Year	Cash Flow (I)			Cash Flow (II)
0	$	77,000		$	35,000
1		29,500			11,500
2		37,000			24,500
3		43,000			18,500

a. If the required return is 12 percent, what is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)

	Profitability index
Project I
Project II

If the required return is 12 percent and the company applies the profitability index decision rule, which project should the firm accept?

b. If the required return is 12 percent, what is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Net present value
Project I	$
Project II	$

If the company applies the NPV decision rule, which project should it take?