Use the following information to answer next three questions:

IO PI IRR LIFE

Project 1 $300,000 1.12 14.38% 15 years

Project 2 $150,000 1.08 13.32% 6 years

Project 3 $100,000 1.20 16.46% 3 years

Assume that the cost of capital is 12%.

If the firm has a maximum capital expenditures budget of $450,000, and if the projects are mutually exclusive but not repeatable, which project(s) should be accepted?

• Projects 1 and 2
• Projects 1 and 3
• Projects 2 and 3
• Projects 1, 2, and 3
• Project 1