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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,

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:

Expected

Project

Risk

Return

A

High

15%

B

Average

12%

C

High

11%

D

Low

9%

E

Low

6%

Which set of projects would maximize shareholder wealth?

A and B.
A, B, and C.
A, B, and D.
A, B, C, and D.
A, B, C, D, and E.

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