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

question 15

Multiple Choice

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.