1. Tara is evaluating two mutually exclusive capital budgeting projects that have the following characteristics:

	Cash Flows
Year	Project Q	Project R
0	$(4,000)	$(4,000)
1	0	3,500
2	5,000	1,100

If the firm's required rate of return is 8 percent, which project should be purchased?

a.	Both projects should be purchased.
b.	Neither project should be purchased.
c.	Project Q should be accepted, because its net present value (NPV) is higher than Project R's NPV.
d.	Project R should be accepted, because its net present value (NPV) is higher than Project Q's NPV.
e.	None of the above is a correct answer.