You are considering two independent projects both of which have been assigned a discount rate of $12$ percent. Project A costs $$39,100$ and produces cash flows of $$15,900$ a year for three years. Project B costs $$22,900$ and produces cash flows of $$14,000$ a year for two years. Based on the profitability index $($PI$),$ what is your recommendation concerning these projects?

Multiple Choice

Accept Project A and reject Project B

Accept Project B because it has the lower PI

Accept Project A because it has the lower PI

Accept both projects

Reject Project A and accept Project B