You are deciding between two investments in the healthcare field. Each investment is projected to produce the following cash flows:

Investment One

Year	Cash
0	-$150,000
1	$10,000
2	$8,000
3	$25,000
4	$50,000
5	$25,000
6	$50,000

Investment Two

Year	Cash
0	-$100,000
1	0
2	0
3	0
4	0
5	$54,000
6	$65,000

Assume a discount rate of 5%. Which investment would you prefer? Why?

Assignment Part 2: How would your analysis change if you assumed 3% inflation per year?

Assignment Part 3: If investment one was riskier than investment two, how would your calculations change so that additional risk is taken into account? Also, does this new information change your project preference?

Real rate