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

Year	Cash Flow (I)	Cash Flow (II)
0	$85,000	$51,000
1	34,900	12,300
2	45,000	32,500
3	28,000	26,500

Requirement 1:
(a)	If the required return is 10 percent, what is the profitability index for each project?

	Profitability index
Project I
Project II

(b)	If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept?

Requirement 2:
(a)	If the required return is 10 percent, what is the NPV for each project?

	Net present value
Project I	$
Project II	$

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