A company is considering two projects, Project A and Project B. The following information is available for each project:
Project A Project B
Investment $500,000 $2,000,000
Net present value of cash flows $600,000 $800,000
Calculate the profitability index for each project. Based on the profitability index, which project, if any, should the company pursue and why?

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The Answer of A company is considering two projects, Project A and Project B. The following information is available for each project:
Project A Project B
Investment $500,000 $2,000,000
Net present value of cash flows $600,000 $800,000
Calculate the profitability index for each project. Based on the profitability index, which project, if any, should the company pursue and why?

A Company Is Considering Two Projects, Project a and Project