Consider the Following Projects, X and Y Where the Firm

question 124

Multiple Choice

Consider the following projects, X and Y where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project Y also costs $600, and generates cash flows of $500 and $275 for the next 2 years, respectively. Which investment should the firm choose if the cost of capital is 25 percent?

• A) Project X, since it has a higher NPV than Project Y
• B) Project Y, since it has a higher NPV than Project X
• C) neither, since both the projects have negative NPV
• D) neither, since both the projects have positive NPV

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Definitions:

Polymerase Chain Reaction

A laboratory technique used to amplify specific DNA sequences from a sample, allowing for the analysis of very small amounts of DNA.

Biotechnology Tool

Tools and techniques derived from the living organisms or their products used in research, diagnostics, and product development.

Specific Section

A distinct part within a document, book, or text devoted to a particular topic.

Electrophoresis

Laboratory technique that separates DNA fragments by size.