Question: 1 . Two new software projects are proposed to a young, start-up company. The Alpha project will cost $150,000 to develop and is expected to

1 . Two new software projects are proposed to a young, start-up company. The Alpha project will cost $150,000 to develop and is expected to have an annual net cash flow of $40,000. The Beta project will cost $200,000 to develop and is expected to have an annual net cash flow of $50,000. The company is very concerned about their cash flow. Using the payback period, which project is better from a cash flow standpoint? Why?

2. You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects. The following chart shows the cash information for each project. Which of the two projects would you fund if the decision were based only on financial information? Why?

company. The Alpha project will cost $150,000 to develop and is expected

to have an annual net cash flow of $40,000. The Beta project

\"Mama I: E mmmhmmm 0 0 3 1513.!!!) 220.011! 215,000 205,000 19?.\" 100,000 1,081,!!!) $225,000 190.000 3M1!!!) 30,!100 30 um 5050M 425.0!!! 1 90M 15M!!! 190.001: 215.!!!) 1m 19'\"!!! 70.900 macaw ai $50,000 150,011} 250.011! 250.013.} 2110.0!!! 1311.011} 120. {III} 'I 100,0!!! 400.000 5l]. III} 150. III} 2110.0!!! 250. III]! 150. [Ill] 1311. EM 9|] {III} am 000 Project: Dust Devils Year Investment Revenue Stream $500,000 50,000 250,000 350,000 Project: Osprey Year Investment Revenue Stream O $250,000 0 75.000 2 75,000 75.000 50,000 Project: Voyagers Year Investment Revenue Stream O $75,000 15,000 2 25,000 50,000 50,000 150,000Recording Project: Time Fades Away Year Investment Revenue Stream $600,000 600.000 75,000 20,000 15,000 10,000 page 58 Recording Project: On the Beach Year Investment Revenue Stream $400,000 400.000 100,000 25,000 20,000 10,000 Recording Project: Tonight's the Night Year Investment Revenue Stream $200,000 N - O 200.000 125,000 75,000 20,000 10,000

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