Delta Ltd. is evaluating two replacement projects:

• Project Alpha: Initial outlay: $18,000, Life: 5 years, Required return: 7%
• Project Beta: Initial outlay: $14,000, Life: 4 years, Required return: 8%
• Cash flows:
  • Project Alpha: Year 1: $4,000, Year 2: $5,000, Year 3: $6,000, Year 4: $6,000, Year 5: $7,000
  • Project Beta: Year 1: $5,000, Year 2: $5,000, Year 3: $4,000, Year 4: $3,000
• Requirements:

1. Calculate the NPV for both projects.
2. Calculate the Profitability Index for both projects.
3. Determine the Payback Period for both projects.
4. Recommend which project to undertake based on NPV and PI.