Vang Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept?
A) Project B is of below-average risk and has a return of 8.5%.
B) Project C is of above-average risk and has a return of 11%.
C) Project A is of average risk and has a return of 9%.
D) None of the projects should be accepted.
Correct Answer:
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