A firm with a WACC of 10% is considering the following mutually exclusive projects:

0 1 2 3 4 5

Project 1	-$450	$40	$40	$40	$190	$190
Project 2	-$500	$250	$250	$150	$150	$150

Which project would you recommend?

Select the correct answer.

a. Neither Project 1 nor 2, since each project's NPV < 0.

b. Project 2, since the NPV2 > NPV1.

c. Both Projects 1 and 2, since both projects have IRR's > 0.

d. Both Projects 1 and 2, since both projects have NPV's > 0.

e. Project 1, since the NPV1 > NPV2.