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

question 76

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 projects at 10%,and high-risk projects at 12%.The company is considering the following projects:Which set of projects would maximize shareholder wealth? $\begin{array}{l}\begin{array}{ccc}\underline { \text { Project } } &&\underline { \text {Risk }} \\\text { A } & & \text { High } \\n & & \text { Average } \\\text { C } & & \text { High } \\\text { D } & & \text { Low } \\\text { E } & & \text { Low }\end{array}\begin{array}{c}\underline { \text {Expected Return} } \\15 \% \\12 \\11 \\9 \\6\end{array}\end{array}$

• A)A, B, and C
• B)A, B, and D
• C)A, B, C, and D
• D)A, B, C, D, and E

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Definitions:

Broad and Global Issues

encompasses widely encompassing, international concerns that affect multiple countries and populations.

Avoid Details

The approach of focusing on broader objectives or strategies without being bogged down by intricate specifics.

Strategic Opportunism

The ability of an organization to remain focused on long-term objectives while also being flexible enough to take advantage of short-term opportunities.

Long-Term Objectives

Strategic goals set to be achieved over an extended period, typically over several years, focusing on sustainable growth and development.