A company has a WACC₁= 12.5% for funding up to $4 million when retained earnings are used. They also have a WACC₂ = 13.7% for funding above $4 million when new equity is raised. If they have the following independant investment opportunities, which projects should the company include in their budget? What is the company's optimal budget?

Project A: Cost of $2 million; IRR 20%

Project B: Cost of $3 million; IRR 14%

Project C: Cost of $4 million; IRR 13%