Tuchel Ltd is considering a new project that has a higher level of risk than its existing projects. The expected cash flows and certainty equivalent coefficients for the project are below:

Year	Expected Post-Tax Cash Flows	Certainty-Equivalent Coefficients
0	- $150,000	1.00
1	$48,000	0.98
2	$45,000	0.95
3	$43,000	0.85
4	$35,000	0.75
5	$30,000	0.65

• The current risk-free rate is 4.5%.
• Tuchel Ltd has a required rate of return of 11%.
• The risk premium for this project is 2.5%.

The NPV of the project using the Certainty-Equivalent Method is:

-$668

Other

-$448

$12,459

$0

$3850

The NPV using the Risk-Adjusted Discount Rate Method is:

$0

$697

Other

-$6350

$14,231

-$666

Should Tuchel Ltd undertake the project under the Certainty-Equivalent Method?

No

Yes

Cannot say

Should Tuchel Ltd undertake the project under the Risk-Adjusted Discount Rate Method?

Yes

No

Cannot say