Calculate the payback period and NPV for a project with an initial investment of $120,000 and expected annual cash inflows of $30,000 for 6 years. Use a discount rate of 8%. Compare the results and discuss the advantages and limitations of each method. Explain why NPV is generally preferred over the payback period in capital budgeting decisions. Analyze the sensitivity of the project’s NPV to changes in the discount rate and cash flow projections. Discuss how the payback period can be useful in assessing the project’s liquidity risk and the time required to recover the initial investment. Consider the strategic implications of using both metrics in investment decision-making, particularly in situations with budget constraints and multiple project options. Explain how incorporating risk assessments and scenario analysis can enhance the evaluation of capital projects.