For a new project select the home directory of the jdk
for example C:\Java\jdk1.7.0_99 or C:\Program Files\Java\jdk1.7.0_99
For an existing project.
1) You must have a jdk installed on the system.
for example in
C:\Java\jdk1.7.0_99
2) go to project structure under File menu ctrl+alt+shift+S
3) SDKs is located below Platform Settings. Select it.
4) click on the green + at the top of the window.
5) select JDK (I have to use the keyboard to select it, I don’t know why).
select home directory for jdk installation.
it should be good to go.