Omega Enterprises is reviewing two potential projects Both require an initial investment of JPY 5,000,000 The expected cash inflows are as follows Year Cash Flows (Project C) Cash Flows (Project D) Initial Investment (5,000,000) (5,000,000) 1 1,500,000 1,000,000 2 1,500,000 2,000,000 3 1,000,000 2,500,000 4 1,000,000 3,000,000 Requirements a Compute the payback period for both projects b Calculate the NPV for each project if the cost of capital is 6 c Which project should Omega Enterprises invest in based on the NPV criterion

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Question: Omega Enterprises is reviewing two potential projects. Both require an initial investment of JPY 5,000,000. The expected cash inflows are as follows: Year Cash Flows

Omega Enterprises is reviewing two potential projects. Both require an initial investment of JPY 5,000,000. The expected cash inflows are as follows:

Year	Cash Flows (Project C)	Cash Flows (Project D)
Initial Investment	(5,000,000)	(5,000,000)
1	1,500,000	1,000,000
2	1,500,000	2,000,000
3	1,000,000	2,500,000
4	1,000,000	3,000,000

Requirements: a. Compute the payback period for both projects. b. Calculate the NPV for each project if the cost of capital is 6%. c. Which project should Omega Enterprises invest in based on the NPV criterion?

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