You are tasked with assessing the performance of the following projects and to rank the projects using the profitability index.

Project 1

The opportunity cost of capital is 8%. The initial cost of the project is $500,000 and generates the following cash flows: $228,000 in year 1, $178,000 in year 2, $249,000 in year 3, and -$12,000 in year 4.

What is the NPV of Project 1?

Select one:

a. Less than $0

b. Between $0 and $25,000

c. Between $25,000 and $50,000

d. Between $50,000 and $75,000

e. Greater than $75,000