Two new software projects are proposed to a young, start-up company.

* The Alpha

project will cost $150,000 to develop and is expected to have an annual net cash flow

of $40,000. The Beta project will cost $200,000 to develop and is expected to have an

annual net cash flow of $50,000. The company is very concerned about their cash flow.

Using the payback period, which project is better from a cash flow standpoint? Why?