Langston Labs has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. Its assets vary widely in risk, and Langston evaluates low-risk projects with a WACC of 8%, average-risk projects at 10%, and high-risk projects at 12%. The company is considering the following projects: Project Risk Expected Return A High 15% B Average 12% C High 11% D Low 9% E Low 6% ? Which set of projects would maximize shareholder wealth?
A. A and B.
B. A, B, and C.
C. A, B, and D.
D. A, B, C, and D.
E. A, B, C, D, and E.
Answer: C
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