QUESTION 1 Ara recent Hagerty Semiconductors Board of Directors meeting, Merle Haggerty was asked to discuss the tople of the compan's weighted averape cout 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 retum ou 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 sets 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? O A Statement la correct; statement 2: correct OB. Statement : incorrect; statement 2: correct OC Statement 1: correct statement 2: incorrect OD. Statement 1: incorrect statement 2: incorrect O E None of the above