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: 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.

Question

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:  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.

Quizplus · Accepted Answer

The Answer of 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:  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.

Langston Labs Has an Overall (Composite) WACC of 10%, Which