ABC has 25 certified diary farms and its only product is milk. You are calculating the NPV of a few potential projects for this company and need to figure out the appropriate discount rate. Based on your calculation, the cost of capital of ABC is 12.5%. Which project has a discount rate that is closest to 12.5%?

1.Enter the vitamin supplement market

2.Expand the business into a new country

3.Make a new product: baby formula

4.Reduce the production costs