At a recent Haggerty Semiconductors Board of Directors meeting, Merle Haggerty was asked to discuss the topic ol weighted average cost of capital (WACC). At the meeting Haggerty made the following statements about the company's WACC: - Statement 1: A company creates value by producing a higher return on its assets than the cost of financing those assets. As such, the WACC is the cost of financing a firm's assets and can be viewed as the firm's opportunity cost of financing its assets. Statement 2: Since a firm's WACC reflects the average risk of the projects that make up the firm, it is not appropriate for evaluating all new projects. It should be adjusted upward for projects with greater-than-average risk and downward for projects with less- than-average risk. Are Statement 1 and Statement 2, as made by Haggerty CORRECT? A Statement 1: incorrect; statement 2: incorrect B E Statement 1: correct; statement 2: incorrect None of these are correct Statement 1: incorrect; statement 2: correct Statement 1: correct