Posted by **Andy** on Monday, March 1, 2010 at 1:21pm.

1. 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 projects at 10%, and high-risk projects at 12%. The company is considering the following projects:

Risk Expected Return

High 15%

Average 12

High 11

Low 9

Low 6

Which set of projects would maximize shareholder wealth? Why?

- Corporate Finance -
**Chimaren**, Tuesday, April 27, 2010 at 11:57am
The answer is all about the risk, not the percentages.

In other words, there are only three projects that exceed the minimum WACC required based on the risk criteria:

15% because it exceeds the high risk WACC of 12%

12% because it meets and exceeds the average WACC of 10%

and the 9% because it exceeds the low WACC of 8%

- Corporate Finance -
**Anonymous**, Sunday, May 9, 2010 at 3:05pm
bgfxbv

- Corporate Finance -
**Grace**, Saturday, February 16, 2013 at 10:34am
PROJECT RISK RETURN

A High 15%

B Average 12

C High 11

D Low 9

E Low 6

so the projects A, B, and D will maximize the shareholder wealth

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