Where Is the Default Risk Associated with a Project Incorporated

question 51

Multiple Choice

Where is the default risk associated with a project incorporated in the NPV analysis?

• A)in the cost of capital, which is the discount rate used
• B)in both the expected future cash flows of the project and the cost of capital for the project
• C)in the expected future cash flows of the project
• D)The default risk should never be considered in an NPV analysis since it cannot be known with certainty.

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