Two new software projects are proposed $to$ a young, start$-up$ company. The Alpha project will cost $$150,000to$ develop and $is$ expected $to$ have $an$ annual net cash flow $of$ $$40,000.$ The Beta project will cost $$200,000to$ develop and $is$ expected $to$ have $an$ annual net cash flow $of$ $$50,000.$ The company $is$ very concerned about their cash flow. Using the Payback period, which project $is$ better from a cash flow standpoint. Why?

You are the head $of$ the project selection team $at$ SIMSOX. Your team $is$ considering three different projects. Based $on$ past history, SIMSOX expects $at$ least a rate $of$ return $of20$ percent. Given the following information for each project, which one should $be$ SIMSOX's first priority? Should SIMSOX fund any $of$ the other projects? $Ifso,$ what should $be$ the order $of$ priority based $on$ return $on$ investment $(ROI)?$ Why?

Project: Dust Devils

Year

Investment

Revenue Stream

$0$

$$500,000$

$0$

$1$

$$50,000$

$2$

$$250,000$

$3$

$$350,000$

Project: Osprey

Year

Investment

Revenue Stream

$0$

$$250,000$

$0$

$1$

$$75,000$

$2$

$$75,000$

$3$

$$75,000$

$4$

$$50,000$

Project: Voyagers

Year

Investment

Revenue Stream

$0$

$$75,000$

$0$

$1$

$$15,000$

$2$

$$25,000$

$3$

$$50,000$

$4$

$$50,000$

$5$

$$150,000$

Hint for number $2$: