Company ABC is evaluating two projects:

• Project Alpha
  • Initial investment: $2,500,000
  • Year 1: $900,000
  • Year 2: $1,200,000
  • Year 3: $1,100,000
  • Year 4: $700,000
• Project Beta
  • Initial investment: $2,800,000
  • Year 1: $1,000,000
  • Year 2: $1,100,000
  • Year 3: $1,400,000
  • Year 4: $900,000

a. Calculate the payback period for each project. b. Determine the NPV of each project at a discount rate of 8%. c. Evaluate the profitability index for both projects. d. Recommend which project should be pursued based on your calculations.