1. PDQ, Inc. has a weighted cost of capital of 14.6% and has $5 million to invest in the following potential average risk projects:

Project Cost IRR

1 $3 million 15%

2 $1 million 14%

3 $2 million 16%

4 $2 million 14.7%

Which projects should PDQ invest in?

a. 1 and 2

b. 2 and 3

c. 3 and 4

d. 1 and 3

e. 1 and 4

f. 1 and 2 and 4