Langston Labs Has an Overall (Composite) WACC of 10%, Which

Multiple Choice

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: $\begin{array} { c c c } \underline{\text { Project} } & \underline{\text { Risk }} & \underline{\text { Expected Return} } \\\text { A } & \text { High } & 15 \% \\\text { B } & \text { Average } & 12 \% \\\text { C } & \text { High } & 11 \% \\\text { D } & \text { Low } & 9 \% \\\text { E } & \text { Low } & 6 \%\end{array}$ Which set of projects would maximize shareholder wealth?

A) A and B
B) A, B, and C
C) A, B, and D
D) A, B, C, and D
E) A, B, C, D, and E