The Phoenix Holdings Inc. has traditionally employed a firm wide discount trate for capital budgeting purposes. However, its two divisions-publishing and entertainment- have different degrees of risk given by Bp = 1 and Be = 2 and the beta for the overall firm is 1.3. The risk-free rate is 6%, the expected return on the market is 12%, and the frim is financed by all equity. Given the information below, which project(s) would you suggest the firm to accept? Assume the firm has enough capital to invest in all projects and the projects are independent.

Division	Proposed Projects	Initial Investment	IRR
Publishing	P1	$1M	0.18
	P2	$2M	0.13
Entertainment	E1	$4M	0.16

		P1and E1
		P1 and P2
		P2 only
		P1 only
		E1 only