Consider the cash flows for two projects, O and P:

• Project O:
  • Initial Investment: $60,000
  • Year 1: $20,000
  • Year 2: $22,000
  • Year 3: $24,000
  • Year 4: $26,000
• Project P:
  • Initial Investment: $55,000
  • Year 1: $18,000
  • Year 2: $20,000
  • Year 3: $22,000
  • Year 4: $24,000

(a) Determine the NPV for both projects using a discount rate of 6%.

(b) Provide the accept/reject decision for each project.

(c) Calculate the payback period for both projects.

(d) Calculate the IRR for both projects.

(e) Which project is more desirable based on NPV and IRR?