12) 17 Points total) You are the VP of capital management at company CCA, which has two distinct lines of business: commercial shipping and commercial real estate. The recently appointed CEO of CCA was previously the head of the shipping division at CCA. As VP of capital management, you report directly to the CEO. You bring three potential investment projects to his attention. You inform the CEO that, due to capital rationing constraints, CCA can only invest in one of the projects below (i.e. you cannot invest in projects A and B, B and C, etc.). The metric to determine the investment decision is NPV. The cost of capital is 10%. Project Project A Project B Project C Cash Flow (end of year) Division 0 1 Shipping -2,000 500 Shipping -500 60 Real Estate -3,000 1,500 3 1,500 2 1,000 550 2,500 a) [4 Points) In the absence of agency problems, determine which project the CEO would likely select. b) [3 Points] Suppose that there is a tendency for the agency problem of entrenching investment to occur. Under this assumption, determine which project is the CEO likely to select. Explain your