Cash Flows (in thousands of USD)
Year	0	1	2	3	4	5	6	7
Project 1	-100	10	20	0	0	110	0	0
Project 2	-100	0	0	0	40	50	80	10
Project 3	-250	0	15	20	30	40	150	110
Project 4	-500	150	150	-100	50	100	150	200
Project 5	-400	100	100	-100	200	200	-80	130

In the above table, five projects were proposed from different departments of the firm trying to compete for the total $1,000,000 capital budget for next year. The CFO made it clear at the meeting that any project with zero or negative NPV should not be funded. Given it is a pharmaceutical firm, the CFO and the key managers are used to concepts of investing in the long-term projects and/or relatively risky projects, and/or projects with volatile cash flows over time. In addition, most of the members on the committee are cautiously optimistic about the future outlook of the economy. Around the time of the meetings, there were rumors that the Federal Reserve Bank is considering increasing the prime interest rates.

1) Assume again that the discount rate is 7%. Suppose that the firm suffers a drop in profits due to a foreign exchange rate change, and as a result, the total capital budget is reduced from one million dollar to $600,000. Whats your capital budgeting decision now? Please explain why or why not you have changed your decisions.