Epsilon Pharmaceuticals is analyzing two research projects Each project requires an initial investment of $100,000 and has the following expected cash flows Year Cash Flows (Project C) Cash Flows (Project D) 0 100,000 100,000 1 30,000 20,000 2 30,000 20,000 3 30,000 30,000 4 30,000 30,000 5 30,000 40,000 a Determine the payback period for both projects b Which project should be selected based on the net present value method, assuming a discount rate of 5

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Question: Epsilon Pharmaceuticals is analyzing two research projects. Each project requires an initial investment of $100,000 and has the following expected cash flows: Year Cash Flows

Epsilon Pharmaceuticals is analyzing two research projects. Each project requires an initial investment of $100,000 and has the following expected cash flows:

Year	Cash Flows (Project C)	Cash Flows (Project D)
0	-100,000	-100,000
1	30,000	20,000
2	30,000	20,000
3	30,000	30,000
4	30,000	30,000
5	30,000	40,000

a. Determine the payback period for both projects. b. Which project should be selected based on the net present value method, assuming a discount rate of 5%?

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