9. Under capital rationing, the selection of a sub-set of projects from a larger number under consideration should be done using the rule where the :

1) aggregate adjusted net present values are maximized.

2) profitability index of each project is greater than 1.

3) internal rate of return on each project for the group of projects exceeds the firm's cost of capital.

4) average payback period for the group of projects exceeds the firm's target payback.

5) budget is allocated to projects which are selected on a random basis.