Gunnell Incorporated is considering two mutually exclusive 10-year investments. The initial cash outlays and expected net after-tax cash flows are shown below.

	Project 1	Project 2
Initial	$(2,960,000)	$(2,200,000)
Year 1	238,000	480,000
Year 2	238,000	455,000
Year 3	279,000	450,000
Year 4	333,000	450,000
Year 5	386,000	365,000
Year 6	535,000	246,000
Year 7	595,000	227,000
Year 8	713,000	209,000
Year 9	832,000	197,000
Year 10	1,070,000	160,000

Part 2 (Algo)

2. Which project would you recommend to Gunnell management? Are there strategic or risk factors that might lead you to recommend the project with the lower NPV? Explain with specific evidence.