Gamma LLC is planning to invest in either Project C or Project D.

Project C

• Year 0: -$50,000
• Year 1: $10,000
• Year 2: $20,000
• Year 3: $30,000
• Year 4: $40,000

Project D

• Year 0: -$60,000
• Year 1: $15,000
• Year 2: $25,000
• Year 3: $35,000
• Year 4: $45,000

The discount rate for Project C is 7%, and for Project D is 9%.

Requirements:

1. Calculate the payback period for each project.
2. Determine which project meets the company's payback period requirement of 3 years.
3. Calculate the profitability index for each project.
4. Recommend the project based on the profitability index.
5. Compute the net present value (NPV) and provide a recommendation based on NPV.