Question $4(2\mathrm{.}5$ points$)$

A firm is considering two projects. Both projects will cost $$5,000.$ However, Project $1$ will generate cash flows of $$2,500$ at$.$ the end of the first year and $$7,500$ at the end of the second year and Project $2$ will generate cash flows of $$7,500$ at the end of the first year and $$2,500$ at the end of the second year. Which project has the highest net present value if the required rate of return is $10\%?$

Project $1$

Project $2$

Both projects have the same net present value.

Cannot determine from information given.