Apex Autos (NYSE: AA) is evaluating two independent investments. Project S costs $150,000 and has an IRR equal to 13 percent, and Project L costs $140,000 and has an IRR equal to 12 percent. AA's capital structure consists of 40 percent debt and 60 percent common equity. Its component costs of capital are: rdt = 5% (after-tax cost of debt), rs = 12% (cost of internal equity), and re=15% (cost of external equity). AA expects to generate $180,000 in retained earnings this year. What is the retained earnings break point? 1) $300,000 2) $287,500 3) $275,700 4) $255,000 5) $235,000 What is the WACC before the retained earnings break point? 1) 8.8% 1) 2) 9.2% 3) 9.8% 4) 10.8% 5) 11.0% What is the WACC after the retained earnings break point? 1) 8.8% 2) 9.2% 3) 9.8% 4) 10.8% 5) 11.0% Which project(s) should be purchased? 1) Projects 2) Project L 3) Both 4) Neither 5) Cannot be determined