Gonzalez Company is considering two new projects with the following net cash flows. The companys required rate of return on investments is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1)

Note: Use appropriate factor(s) from the tables provided.

Year	Net Cash Flows
Project 1	Project 2
Initial investment	$(46,000)	$(74,000)
1.	11,500	35,000
2.	25,900	20,000
3.	21,500	25,000

1. Compute payback period for each project. Based on payback period, which project is preferred?
2. Compute net present value for each project. Based on net present value, which project is preferred?

Compute payback period for each project. Based on payback period, which project is preferred? Note: Cumulative net cash outflows must be entered with a minus sign. Do not round your intermediate calculations. Round your Payback Period answer to 2 decimal places.

Year	Project 1	Project 2
Net Cash Flows	Cumulative Net Cash Flows	Net Cash Flows	Cumulative Net Cash Flows
Initial investment	$(46,000)		$(74,000)
Year 1
Year 2
Year 3
Payback period
Project 1 Payback period		years
Project 2 Payback period		years
Based on payback period, which project is preferred?

• Compute net present value for each project. Based on net present value, which project is preferred? Note: Round your present value factor to 4 decimals. Round your final answers to the nearest whole dollar.

	Net Cash Flows	Present Value Factor	Present Value of Net Cash Flows
Project 1
Year 1
Year 2
Year 3
Totals
Initial investment
Net present value
Project 2
Year 1
Year 2
Year 3
Totals
Initial investment
Net present value
Based on net present value, which project is preferred?