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The Arbors at Los Brisos and Ranch Pointe are being consideredfor investment. Our initial investment in the two propertiesare: The Arbors at Los Brisos $2,000,000 Ranch Pointe $2,750,000The cost of capital for our firm is 12%We need to rank the projects according to the profitabilityindex.The Arbors at Los Brisos Ranch Pointe Initial Investment -$2,000,000-$2,750,000Year 1 $450,000 $300,000Year 2 $600,000 $500,000Year 3 $750,000 $750,000Year 4 $700,000 $875,000Year 5 $700,000 $950,000Which of the two should be ranked higher based upon profitabilityindex?The Arbors at Los BrisosRanch PointeNeither because the profitability is less than 1.0Not enough information available to determine.
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