Read the following context;

We had been saving every month for the last years an amount that represents a total sum of $70,000, and now we are planning to do some improvements in our business. In order to improve our operations and increase our revenues, we have some projects and investment alternatives that we are considering, having in mind the goal of expanding our business and opening a new store with an expected cost of $140,000.

Question

Choose a project, with the following conditions, that you could start in order to maximize your savings and produce enough money to be able to afford the new store using part of our savings in one of these two projects, if we assess them at a cost of capital of 2%:

Project 1: Investing $60,000 in a project that will produce cashflows of $11,800 per quarter for 5 years.

Project 2: Investing $70,000 in a project that will produce cashflows of $3,700 per month for 5 years.