Wreathfield Inc., is choosing between two mutually exclusive projects. The cash flows for the two projects are summeraised below. The firm has a cost of capital of 12%, and the risk of the projects is equivalent to the average risk of the firm.

	Project J	Project K
Year 0	(12,000)	(20,000)
Year 1	4,000	3,000
Year 2	5,000	3,000
Year 3	6,000	3,000
Year 4		5,000
Year 5		8,000
Year 6		8,000

Wreathfield should accept:

1. Project J
2. Project K
3. Neither Project J nor Project K