BioGreen is considering two new projects with the following net cash flows. The firm's hurdle...

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BioGreen is considering two new projects with the following net cash flows. The firm's hurdle rate is 6%. (PV of $1 = 0.944%, PVIFA of $1 = 4.212, FV of $1 = 1.060, FVA of $1 = 4.973)**

Year

Project O Cash Flow

Project P Cash Flow

0

$(950,000)

$(700,000)

1

$250,000

$190,000

2

$300,000

$230,000

3

$350,000

$270,000

4

$400,000

$310,000

5

$450,000

$350,000

a. Compute the payback period for each project. Which project is preferred based on the payback period?
 b. Compute the net present value for each project. Which project is preferred based on the net present value?

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