A company has to make a choice between two projects, because the available resources in money and kind are not sufficient to run both at the same time. Each project would take 9 months and would cost $250,000.

1. The first project is a process optimization which would result in a cost reduction of $120,000 per year. This benefit would be achieved immediately after the end of the project.
2. The second project would be the development of a new product which could produce the following net profits after the end of the project:

1. year:	$	15,000
2. year:	$	125,000
3. year:	$	220,000

Assumed is a discount rate of 5% per year. Looking at the present values of the benefits of these projects in the first 3 years, what is true for their monetary attractiveness?

Both projects are equally attractive.

One cannot say based on the numbers.

The second project is more attractive.

The first project is more attractive.