* 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 independent investment opportunities, which projects should the company include in their budget? What is the company's optimal capital 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%