Question: 4. 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

4. 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 annual net cash flow of $40,000 for 5 years. The Beta project will cost $200,000 to develop and is expected to have annual net cash flow of $50,000 for 5 years. The company is very concerned about their cash flow. Using the simple payback period, which project is better from a cash flow standpoint? Why? Required: Show calculations for payback periods for both projects.

5. Assume that the rate of inflation is 6%, use the Net Present Value (NPV), approach to calculate the NPV for both projects. Which project would you now recommend? Why?

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