1.Following are three independent projects Peanut/ Pecan Processing (PPP) is evaluating:

Project	IRR	RISK
P	10%	Low
Q	12%	Average
R	14.5%	High

PPP generally considers risk when examining projects by adjusting its average required rate of return, r, which equals 11 percent. A 4 percent adjustment is made for high-risk projects, and a 2 percent adjustment is made for low-risk projects. Which project(s) should PPP purchase?

2.The CFO of Lazy Loungers is evaluating the following independent, indivisible projects:

Project	Cost	IRR
A	$10,000	21.0%
B	15,000	20
C	25,000	16

Lazys weighted average cost of capital (WACC) is 14 percent if the firm does not have to issue new common equity; if new common equity is needed, its WACC is 17 percent. Lazys capital structure consists of 40 percent debt. If Lazy has no preferred stock and expects to generate $24,000 in retained earnings this year, which project(s) should be purchased?