STU Enterprises has a budget of $900,000 for capital projects. The company is considering five projects, each with different investment needs, NPVs, and IRRs. The opportunity cost of capital is 12 percent. Consider the following projects:

• Project 1: Investment of $200,000; NPV of $25,000; IRR of 13%
• Project 2: Investment of $250,000; NPV of $30,000; IRR of 12.5%
• Project 3: Investment of $300,000; NPV of -$10,000; IRR of 8%
• Project 4: Investment of $150,000; NPV of $15,000; IRR of 10%
• Project 5: Investment of $100,000; NPV of $20,000; IRR of 14%

Requirements:

1. Identify which projects to undertake.
2. Calculate the total investment for the selected projects.
3. Determine the total NPV of the selected projects.
4. Evaluate the IRR and its relevance to the decision-making process.

Discuss the role of the opportunity cost of capital.