4. The Lalchand Co. is analyzing two mutually exclusive proposals, each costing 30,000 and having a five-year expected life. Each project will have expected cash flows which will increase by 3,000 each year after the first year, and will not have any value after the fifth year. The first year possible net cash inflows for project 1 are 10,000, 14,000 and 16,000 with associated probabilities of 0.25, 0.50 and 0.25, respectively. The first year possible net cash inflows for Project 2 are 4,000, 12,000 and 25,000 with associated probabilities of 0.20, 0.50 and 0.30, respectively. Project 1 is considered less risky and can be evaluated at 8 per cent, while Project 2 is more risky and can be evaluated at 10 per cent rate of discount. Which project should be chosen?