$1.$ Saskatoon Real Estate Development $($SRED$)$ is considering three projects P$1,$ P$2,$ and P$3.$ The financial manager, Sara, estimates the betas of these projects and their IRRs $($Internal Rates of Return$)$ as follows:

$$

Project

P$1$

P$2$

P$3$

Beta

$0\mathrm{.}60$

$0\mathrm{.}90$

$1\mathrm{.}50$

IRR

$11\%$

$12\mathrm{.}5\%$

$15\%$

Sara forecasts the expected return on the market is $13\%,$ the expected risk$-$free rate is $5\%,$ and determines that SRED$$s WACC is $12\%.$

a$)$ If Sara ignores risk and uses the IRR as basis for acceptance or rejection, which projects would be accepted? $(3$ marks$)$