1.Two new software development projects are proposed to a young, start-up company. The Alpha project will cost $300,000 to develop and is expected to have annual net cash flow of $40,000. The beta project will cost $200,000 develop and is expected to have annual net cash flow of $40,000. The company is very concerned about their cash flow. Using the payback period method, which project is better from a cash flow standpoint? Why?
2.A five-year project has a projected net cash flow of $25,000, $35,000, $40,000, $25,000, and $20,000 in the next five years. It will cost $60,000 to implement the project. If the required rate of return is 15%, conduct a discounted cash flow calculation to determine the NPV.