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

Lazy's 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. Lazy's 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?