Brown and Company uses the internal rate of return (IRR) method to evaluate capital projects. Brown is considering four independent projects with the following IRRs: Project IRR I 10% II 12% III 14%...

Brown and Company uses the internal rate of return (IRR) method to evaluate capital projects.

Brown is considering four independent projects with the following IRRs:

Project                  IRR

I                               10%

II                             12%

III                            14%

IV                            15%

Brown’s cost of capital is 13%. Considering these projects are risker than average, a 1.5% adjustment is made to the cost of capital. Which one of the following project options should Brown accept based on IRR?