A construction company is evaluating two land development projects. The data is as follows:

• Project 1:

• Initial Cost: $800,000
• Cost of Capital: 10%
• Cash Inflows: Year 1: $200,000, Year 2: $210,000, Year 3: $220,000, Year 4: $230,000, Year 5: $240,000

• Project 2:

• Initial Cost: $900,000
• Cost of Capital: 9%
• Cash Inflows: Year 1: $220,000, Year 2: $230,000, Year 3: $240,000, Year 4: $250,000, Year 5: $260,000

Requirements:

1. Determine the payback period for each project.
2. Calculate the NPV for each project.
3. Compute the IRR for each project.
4. Advise which land development project to proceed with and justify your decision.