6) Clarion Corp. is evaluating two mutually exclusive, essential projects which are expected to generate the following cash flows. Clarion uses a discount rate of 15% (WACC) for both projects. 1 Year Project M Projects 0 - 300,000 - 200,000 485,000 300,000 2 - 150,000 - 300,000 3 - 14,000 250,000 a) Using the NPV evaluation criterion, which project should Clarion select? Why? b) Using the IRR evaluation criterion, which project would Clarion rank higher? Why? Overall, which project should Clarion select? c) Clarion has estimated the following Marginal Cost of Capital (MCC) Schedule: WACC = 13.5% Breakpoint (Retained Earning) = $1,360,000 WACC2 = 15% In addition to the essential project Clarion is mandated to undertake, the firm is evaluating the following independent, discretionary, normal cash flow projects as part of their Investment Opportunity Set: Project Investment () Internal Rate of Return A $500,000 15.3% B $500,000 14.7% $800,000 13.9% What is Clarion's optimal capital budget - which projects should they invest in and which ones should they reject