Where should there be a paragraph break in the following text?

Billy felt good about his speech. He thought he made the points he wanted to make clearly and that he had made a connection with the crowd. He sat in his seat feeling satisfied. (1.) Mandy would have to do something crazy to win this debate. (2.) Mandy approached the podium, feeling smug. She knew she had one last trick up her sleeve. (3.) She casually smoothed out her dress and shot Billy a devious smile. She cleared her throat and said, (4.) “I accept Billy’s offer to be his running mate,” and the crowd cheered.

A. 2.
B. 3.
C. 1.
D. 4.