Projects O and P require initial investments of $1,000 and $1,500, respectively. Project O will return $600, $700, and $800 over the next three years. Project P will return $500, $800, and $1,200 over the same period.

1. Compute the NPV of each project at a 5% discount rate.
2. Find the IRR for both projects.
3. Calculate and compare the profitability indexes.

Discuss the preferred project based on NPV, IRR, and profitability index.