Exercise $24-9($Algo$)$ Payback period; net present value; unequal cash flows LO P$1,$ P$3$

Gonzalez Company is considering two new projects with the following net cash flows. The company$$s required rate of return on investments is $10\%.($PV of $$1,$ FV of $$1,$ PVA of $$1,$ and FVA of $$1)($Use appropriate factor$($s$)$ from the tables provided.$)$

Year Net Cash Flows

Project $1$ Project $2$

Initial investment $$(60,000)$ $$(56,000)$

$1.15,00035,000$

$2.27,80020,000$

$3.21,50020,000$

a$.$ Compute payback period for each project. Based on payback period, which project is preferred?

b$.$ Compute net present value for each project. Based on net present value, which project is preferred?