Mercury Metals Has Up to $100 Million Budgeted to Purchase

Mercury Metals has up to $100 million budgeted to purchase high efficiency smelters. The company has an 12% hurdle rate. A part of a smelter cannot be purchased. If Smelter A will cost $55 million and provide an expected income before depreciation of $16 million for each of 20 years and Smelter B will cost $90 million and provide an expected income before depreciation of $22 million in each of 20 years, which is the project Mercury Metals should undertake?

A) Project A with the higher profitability index at 2.2.
B) Project B has the higher profitability index at 1.8.
C) Project A has the higher NPV at $64.5 million.
D) Project A has the higher IRR at 29%.
E) Project B with the higher NPV at $74.3 million.