A company has $310,000 to invest in either Project K1 or Project L1. The cash flows are as follows:

Project K1 generates cash flows of $85,000 each year for five years. Project L1 generates cash flows of $30,000 in the first year, $50,000 in the second year, $120,000 in the third year, $160,000 in the fourth year, and $75,000 in the fifth year. The discount rate is 8%.

Required:

1. For each project, calculate the:
   • Simple payback period
   • Discounted payback period
   • Net present value
2. Prepare a statement of changes in equity for the chosen project.

Recommend which project the company should select based on the results of your calculations.