A company has $300,000 to invest in either Project M1 or Project N1. The cash flows are as follows:

Year	Project M1	Project N1
1	$80,000	$30,000
2	$80,000	$50,000
3	$80,000	$110,000
4	$80,000	$150,000
5	$80,000	$70,000

The discount rate is 7%.

Required:

1. For each project, calculate the:
   • Simple payback period
   • Discounted payback period
   • Net present value
   • Internal rate of return
   • Profitability index
2. Prepare a statement of retained earnings for the selected project.
3. Advise the firm on which project to select based on the results of your calculations.