Blue Ocean Enterprises is evaluating two potential projects with the following net cash flows. The company's required rate of return on investments is 12%. (PV of $1, FV of $1, PVA of $1, and FVA of $1).

Year	Project OceanA	Project OceanB
0	$(500,000)	$(550,000)
1	$150,000	$140,000
2	$190,000	$180,000
3	$230,000	$220,000
4	$270,000	$260,000

a. Determine the payback period for each project. Which project is preferred based on the payback period?

b. Determine the net present value for each project. Which project is preferred based on the net present value?