Luxury Production Materials (LPM) generated the following information for its capital budgeting manager:

Capital Structure

Project Cost IRR Type of Capital Proportion

D $70,000 18.0% Debt 60.0%

E 65,000 15.0 Common equity 40.0

F 75,000 14.0

G 72,000 12.0

LPMs weighted average cost of capital (WACC) is 13 percent if the firm does not have to issue new common equity; if new common equity is needed, its WACC is 16 percent. If LPM expects to generate $80,000 in retained earnings this year, which project(s) should be purchased? Assume that the projects are independent and indivisible.

	a.	Projects D, E, and F should be purchased.
	b.	Only Project D should be purchased.
	c.	None of the projects should be purchased.
	d.	Projects D and E should be purchased.
	e.	All of the projects should be purchased.