Question: Profitability Index versus NPV. Consider these two projects:

Project C0 C1 C2 C 3
A -$36 +$20 +$20 +$20
B -50 +25 +25 +25

a. Which project has the higher NPV if the discount rate is 10 percent?
b. Which has the higher profitability index?
c. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? Which project is most attractive to a firm that is limited in the funds it can raise?