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LaPango Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk
LaPango Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept?
| a) | Project B, which is of below-average risk and has a return of 8.5%. | |
| b) | Project C, which is of above-average risk and has a return of 11%. | |
| c) | Project A, which is of average risk and has a return of 9%. | |
| d) | None of the projects should be accepted. | |
| e) | All of the projects should be accepted. |
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