Titan Enterprises is evaluating two potential investments. The company’s required rate of return is 13%.

Project M:

• Initial Investment: $(250,000)
• Year 1: $85,000
• Year 2: $90,000
• Year 3: $95,000
• Year 4: $105,000

Project N:

• Initial Investment: $(270,000)
• Year 1: $80,000
• Year 2: $85,000
• Year 3: $100,000
• Year 4: $110,000

a. Compute the payback period for each project. Based on the payback period, which project is preferred?

b. Compute the net present value (NPV) for each project. Based on NPV, which project is preferred?