The relative risk of a proposed project is best accounted for by which of the following procedures?
What is the best way to account for the relative risk of a proposed project?
a. Adjust the discount rate upward if the project is judged to have above-average risk.
b. Adjust the discount rate upward if the project is judged to have below-average risk.
c. Reduce the NPV by 10% for risky projects.
d. Select a risk factor equal to the average discount rate.
e. Ignore risk because project risk cannot be measured accurately.
4 Answers
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