3.18 Profile Model. Assume the project profile model shown in Figure 3.11. Define the efficient frontier. The dotted lines represent the minimum return and the maximum risk that the company will accept. Which projects would be suitable for retaining and which should be dropped from the com- pany's portfolio? Why? 3.19 Profile Model. Using the information from the profile model in Problem 3.18, construct an argument as to why project B is preferable to project C. 3.20 Discounted Payback. Your company is seriously consider- ing investing in a new project opportunity, but cash flow is tight. Top management is concerned about how long it will take for this new project to pay back the initial investment of $50,000. You have determined that the project should gener- ate inflows of $30,000, $30,000, $40,000, $25,000, and $15,000 for the next five years. Your firm's required rate of return is 15%. How long will it take to pay back the initial investment? D E Risk B. A Return FIGURE 3.11 Project Profile Model (Problem 3.18)