R1(config)#interface serial 0/0/0
R1(config-if)#ip address 192.168.1.1 255.255.255.0
R1(config-if)#exit
R2(config)#interface serial 0/0/1
R2(config-if)#ip address 192.168.1.2 255.255.255.0
R2(config-if)#exit
R1(config)#int S0/0/0
R1(config-if)#encapsulation ppp
R1(config-if)#ppp chap hostname abc
R1(config-if)#ppp chap password cisco
R2(config)#username abc password cisco
R2(config)#int S0/0/1
R2(config-if)#encapsulation ppp
R2(config-if)#ppp authentication chap
Router#ping
Router#debug ppp authentication