A Company Is Considering Two Projects, Project a and Project

question 77

Essay

A company is considering two projects, Project A and Project B. The following information is available for each project:
$\begin{array} { l r r } &{ \text { Project A } } &{ \text { Project B } } \\\text { Investment } & \$ 2,500,000 & \$ 2,000,000 \\\text { Net present value of cash flows } &\$ 900,000 & \$ 800,000\end{array}$
Calculate the profitability index for each project. Based on the profitability index, which project should the company pursue and why?

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Definitions:

Coding Region

A portion of DNA or RNA that codes for the amino acid sequence of a protein and is instrumental in protein synthesis.

AUG

The RNA codon that signals the start of a protein-coding sequence and encodes for the amino acid methionine.

UAA

A stop codon in genetic code signaling the end of a protein synthesis.

UUU

In genetic code, a triplet nucleotide sequence (uracil-uracil-uracil) in RNA that codes for the amino acid phenylalanine, playing a role in protein synthesis.