Question: A firm is considering two projects. Both have an initial investment of $1,000,000 and pay off over the next five years in this fashion. The

A firm is considering two projects. Both have an initial investment of $1,000,000 and pay off over the next five years in this fashion. The is 6%.

Option 2 Option 1 -1,000,000 Year O -1,000,000 Year 1 1,000,000 250,000 Year 2 250,000 Year 3 250,000 Year 4 250,000 Yea

a. Which of these has a faster payback period?
b. Which of these options has a higher net present value?
c. Which of these options has a higher internal rate of return (IRR)?

Option 2 Option 1 -1,000,000 Year O -1,000,000 Year 1 1,000,000 250,000 Year 2 250,000 Year 3 250,000 Year 4 250,000 Year 5 100,000 250,000

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