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XYZ Inc. is evaluating five investment opportunities. The following table summarizes the initial cost and the expected benefit for each project, as well as the

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XYZ Inc. is evaluating five investment opportunities. The following table summarizes the initial cost and the expected benefit for each project, as well as the appropriate discount rate based on the risk of each venture. All projects pay the benefit in the third year. All values in the table are in million dollars? Initial Project Investment Expected Benefit in Discount rate for the Year 3 project 1 5 5 10.8773 10% 2 2 6 12.6671 11% 3 7 14.108 10.50% 4 7 14.7977 10.80% 5 6 12.1327 11.40% If the firm has $13 million capital, which projects should the firm invest in? a. Project 1 and Project 2 b. Project 1 and Project 4 c. Project 3 and Project 4 d. Project 2 and Project 4 e. None of the above

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