Step 1 : Configure topology as given in pic.
Step 2 : Configure IP address According Topolgy.
Step 3 : Configure Loopback address
Step 4 : Check Protocol which is Cisco by default 

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 Step 1 : Configure topology as given in pic.



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Step 2 : Configure IP address According Topolgy.

R1#
R1#configure terminal
Enter configuration commands, one per line.  End with CNTL/Z.
R1(config)#
R1(config)#interface serial 1/0
R1(config-if)#
R1(config-if)#ip address 192.168.12.1 255.255.255.0
R1(config-if)#no shutdown
R1(config-if)#

R2

R2#configure terminal
Enter configuration commands, one per line.  End with CNTL/Z.
R2(config)#
R2(config)#interface serial 1/0
R2(config-if)#
R2(config-if)#ip address 192.168.12.2 255.255.255.0
R2(config-if)#
R2(config-if)#no shutdown
R2(config-if)#exit
R2(config)#

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  Step 3 : Configure Loopback address

R1

R1#
R1#configure terminal
Enter configuration commands, one per line.  End with CNTL/Z.
R1(config)#
R1(config)#interface loopback 
R1(config-if)#ip address 1.1.1.1 255.255.255.0 
R1(config-if)#exit
R1(config)#
R2

R2(config)#      
R2(config)#interface loopback 0
R2(config-if)#
R2(config-if)#ip address 2.2.2.2 255.255.255.0
R2(config-if)#
R2(config-if)#no shutdown
R2(config-if)#exit
R2(config)# 
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 Step 4 : Configure PPP Authentication CHAP

R1

 R1(config)#username R2 password cisco
R1(config)#interface serial 1/0
R1(config-if)#encapsulation ppp
R1(config-if)#ppp authentication chap
R1(config-if)#exit
R1(config)#

R2
R2(config)#username R1 password cisco
R2(config)#interface serial 1/0
R2(config-if)#encapsulation ppp
R2(config-if)#ppp authentication pap
R2(config-if)#ppp pap sent-username R1 password cisco
R2(config-if)#exit
R2(config)#

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