A firm with a cost of capital of 13 percent is evaluating three capital projects. The internal rates of return are as follows:

Project Internal Rate of Return

1 14%

2 15

3 11

The firm should _____________.

a.

accept Project 1, and reject Projects 2 and 3

b.

accept Project 1 and 2, and reject Project 3

c.

accept Project 3, and reject Projects 1 and 2

d.

accept Project 2, and reject Projects 1 and 3