Your organization is analyzing two potential projects, Project Alpha and Project Beta. The estimated cash flows for each project are shown below. Both projects require a 5-year horizon.

Project Alpha:

• Year 0: $(300)
• Year 1: $80
• Year 2: $100
• Year 3: $120
• Year 4: $150
• Year 5: $200

Project Beta:

• Year 0: $(250)
• Year 1: $70
• Year 2: $90
• Year 3: $110
• Year 4: $130
• Year 5: $160

The discount rate is 10%.

a. What is capital budgeting? b. What are the steps involved in the capital budgeting process? c. Calculate the payback period for both projects. d. Define and calculate NPV and IRR for both projects. e. Which project should the company accept based on NPV and IRR?