A rich, friendly, and probably slightly unbalanced benefactor offers you the opportunity to invest $1 million in two mutually exclusive ways. The payoffs are:

a. $2 million after 1 year, a 100% return.

b. $300,000 a year forever.

Neither investment is risky, and safe securities are yielding 7%. Which investment will you take? You can't take both, so the choices are mutually exclusive. Do you want to earn a high percentage return, or do you want to be rich?

Explain how to calculate NPV for a and b.