Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: a. What are the profitability indexes of the projects? b. What should Fabulous Fabricators do? HEER a. What are the profitability indexes of the projects? (Round to two decimal places.) The profitability index for contract A is The profitability index for contract B is (Round to two decimal places.) The profitability index for contract C is (Round to two decimal places.) b. What should Fabulous Fabricators do? (Select the best choice below.) O A. Since the NPV of A is the largest, it should choose A. O B. It should take the two projects with the highest profitability indexes: C and A. OC. Since it has the capacity to do both B and C and NPVB + NPVC is greater than NPVA. it should do both B and C. O D. Since the profitability index for C is the largest, it should choose C.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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5. Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: a. What are the profitability indexes of the projects? b. What should Fabulous Fabricators do? **round to two decimal places**
Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts:
a. What are the profitability indexes of the projects?
522
b. What should Fabulous Fabricators do?
vitte
ICEERD
=yⓇ
a. What are the profitability indexes of the projects?
Off
The profitability index for contract A is
(Round to two decimal places.)
est f
The profitability index for contract B is
(Round to two decimal places.)
The profitability index for contract C is
(Round to two decimal places.)
es C
b. What should Fabulous Fabricators do?
(Select the best choice below.)
-Th
O A. Since the NPV of A is the largest, it should choose A.
w on
O B.
It should take the two projects with the highest profitability indexes: C and A.
een
C.
Since it has the capacity to do both B and C and NPVB + NPVC is greater than NPVA, it should do both B and C.
O D. Since the profitability index for C is the largest, it should choose C.
nds
ave
Race
accc
45% C
IS RU
ay at
ticket
d More
814996
of mon
Transcribed Image Text:Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: a. What are the profitability indexes of the projects? 522 b. What should Fabulous Fabricators do? vitte ICEERD =yⓇ a. What are the profitability indexes of the projects? Off The profitability index for contract A is (Round to two decimal places.) est f The profitability index for contract B is (Round to two decimal places.) The profitability index for contract C is (Round to two decimal places.) es C b. What should Fabulous Fabricators do? (Select the best choice below.) -Th O A. Since the NPV of A is the largest, it should choose A. w on O B. It should take the two projects with the highest profitability indexes: C and A. een C. Since it has the capacity to do both B and C and NPVB + NPVC is greater than NPVA, it should do both B and C. O D. Since the profitability index for C is the largest, it should choose C. nds ave Race accc 45% C IS RU ay at ticket d More 814996 of mon
Ⓡ
a. What are the pr
ff.
The profitability in
stf The profitability in
The profitability in
SC
b. What should Fa
TH
OA. Since the
Data table
(Click on the following icon in order to copy its contents into a spreadsheet.)
NPV
Use of Facility
Contract
A
$2.03 million
100%
B
$0.96 million
50%
C
$1.47 million
50%
- X
Transcribed Image Text:Ⓡ a. What are the pr ff. The profitability in stf The profitability in The profitability in SC b. What should Fa TH OA. Since the Data table (Click on the following icon in order to copy its contents into a spreadsheet.) NPV Use of Facility Contract A $2.03 million 100% B $0.96 million 50% C $1.47 million 50% - X
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