A company has $260,000 to invest in either Project M or Project N. The cash flows are as follows:

Year	Project M	Project N
1	$75,000	$30,000
2	$75,000	$50,000
3	$75,000	$100,000
4	$75,000	$160,000
5	$75,000	$70,000

The discount rate is 7%.

Required:

1. For each project, calculate the:
   • Simple payback period
   • Discounted payback period
   • Net present value
2. Prepare a statement of retained earnings for the selected project.

Advise the firm on which project to select based on the results of your calculations.