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Wagner 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? Project A is of average risk and has a return of 9%, Project B is of below-average risk and has a return of 8.5%, Project C is of above-average risk and has a return of 11%, None of the projects should be accepted, or All of the projects should be accepted.

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This solution is comprised of a detailed explanation to answer which of the following projects (A, B, and C) should the company accept.

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Cost of Capital

Wagner Inc estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC OF 8%, and its ...

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