The Food Corporation has a capital structure made up of 40% debt and 60% equity, given a tax rate of 30%. The company will issue $1,000 face value bonds maturing in 20 years with a coupon of 9% at a price of $1,098.18. the current market interest rate on the bonds of a similar risk profile is 8%. The firm is planning to common stock at a price of $45. The next expected dividend on the stock is $2.70. The dividend for the firm is expected to grow at a constant annual rate of 5% per year indefinitely. The company has the following two INDEPENDENT projects available. Project 1 has an initial outlay of $10,000 and an IRR of 10%. Project 2 has an initial outlay of $100,000 and an IRR of 11%. Which of the above projects should the company ACCEPT?