ABC Inc. is trying to decide which one of two projects it should accept. Both projects have the same start-up costs. Project 1 will produce annual cash flows of $52,000 a year for six years. Project 2 will produce cash flows of $48,000 a year for eight years. The company requires a 15 percent rate of return. Which project should the company select and why?

		Project 2, because the present value of the cash inflows exceeds those of Project 1 by $18,598.33
		Project 2, because the total cash inflows are $72,000 greater than those of Project 1
		Project 1, because the annual cash flows are greater by $4,000 than those of Project 2
		It does not matter as both projects have almost identical present values.
		Project 1, because the present value of its cash inflows exceeds those of Project 2 by $14,211.62