3, (3 pts) (Cfin, 11-18) Over-the-Top Canopies (OTC) is evaluating two independent investments. Project S costs $150,000 and has an IRR qual to 12 percent, and project L costs $140000 and has an IRR equal to 10 percent. OTC's capital structure consists of 20 percent debt and 80 percent are Rdt 4%, Rs-10%, and Re-12.5%. If OTC common equity, and its component costs of capital expects to generate $230,000 in retained earnings this year, which projects should be purchased? 4, (5 pts) (Cfin, 12-2) Loving Gardens (LG) has $6 million in assets, $700,000 EBIT, 80,000 shares of stock outstanding, and a marginal tax rate equal to 40%. If LG's debt-to-assets ratio (D/TA) is 70%, it pays 12% interest on debt, whereas if the D/TA ratio is 40%, interest is 9%. Calculate LG's EPS and ROE (ROE=net income/equity) for each capital structure. Which capital structure is better