Relative Risk of a Proposed Project Is Best Accounted for by Which

question 37

Multiple Choice

relative risk of a proposed project is best accounted for by which of the following procedures?

• A)Adjusting the discount rate upward if the project is judged to have above-average risk.
• B)Adjusting the discount rate downward if the project is judged to have above-average risk.
• C)Reducing the NPV by 10% for risky projects.
• D)Picking a risk factor equal to the average discount rate.
• E)Ignoring risk because project risk cannot be measured accurately.

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