Question
Kevin's Balloon Company uses a risk-adjustment when evaluating projects of different risk. Its average project WACC is 10%, however, their projects often differ widely in
Kevin's Balloon Company uses a risk-adjustment when evaluating projects of different risk. Its average project WACC is 10%, however, their projects often differ widely in risk. Thus, Kevin analyzes low-risk projects with a WACC of 8%, average-risk projects at 10%, and high-risk projects at 12%. Kevin's Baloons is considering the following projects:
Project | Risk | Expected Return |
A | High | 15% |
B | Average | 12% |
C | High | 11% |
D | Low | 9% |
E | Low | 6% |
Which set of projects would maximize shareholder wealth?
Group of answer choices
A, B, C, and D.
A, B, and D.
A, B, and C.
A, B, C, D, and E.
A and B.
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