You are in charge of one division of Yeti Surplus Inc. Your decision is subject to capital rationing. Your division has 4 indivisible projects available, detailed as follows:

Project Initial Outlay IRR NPV

1. 2 million 18% 2,500,000

2. 1 million 15% 950,000

3. 1 million 10% 600,000

4. 3 million 9% 2,000,000

If you must select projects subject to a budget constraint of 5 million dollars, which set of projects should be accepted so as to maximize firm value?

A. Projects 1, 2 and 3

B. Projects 2,3 and 4

C Project 1 only

D Projects 1 and 4