When Is the Risk-Adjusted Discount Rate Approach Considered Preferable to the Weighted

question 57

Multiple Choice

When is the risk-adjusted discount rate approach considered preferable to the weighted cost of capital approach in determining the net present value of a project?

• A)It is preferable when the projects under consideration differ significantly in the number of cash flows generated by the projects.
• B)It is preferable when the projects under consideration differ significantly in their total return.
• C)It is preferable when the projects under consideration differ significantly in their cash inflows.
• D)It is preferable when the projects under consideration differ significantly in their risk characteristics.

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