The MacMillen Company has equal amounts of low-riskaverage-risk and high-risk pr

The MacMillen Company has equal amounts of low-riskaverage-risk and high-risk projects. The firms overall WACC is12%. The CFO believes that this is the correct WACC for thecompanys average-risk projects but that a lower rate should beused for lower-risk projects and a higher rate for higher-riskprojects. The CEO disagrees on the grounds that even thoughprojects have different risks the WACC used to evaluate eachproject should be the same because the company obtains capital forall projects from the same sources. If the CEOs position isaccepted what is likely to happen over time?