Huawei india Pvc is planning to invest in a new project, and the company has two alternative investment options. You have been appointed to evaluate the options and give recommendations to the company. The expected initial capital outflow is $ 1,000,000 for each option. The company expects to incur $ 20,000 and $ 25,000 for working capital requirement for option 1 and option 2, respectively. The future net cash flows for both options are given below.

Year	Option 01	Option 02
1	500,000	450,000
2	400,000	420,000
3	200,000	400,000
4	350,000	300,000
5	150,000	175,000

Required rate of return is 15% per annum and discounting factors for 15% rate are as follows.

Year	0	1	2	3	4	5
Discounting factor	1	0.869	0.756	0.657	0.571	0.497

You are required to;

a) Calculate the payback period for both options and give recommendations on the answer.

b) Calculate the Net Present Value (NPV) for both options and give the recommendation on the answer.