Which of the Following Adjustment Techniques Would Be Preferred to Account

question 113

Multiple Choice

Which of the following adjustment techniques would be preferred to account for additional project risk?

• A) Increase the discount rate.
• B) Adjust expected cash flows downward.
• C) Increase the beta.
• D) Adjust the market risk premium.

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Definitions:

Accounting Principles

Fundamental guidelines or rules that govern the field of accounting, such as consistency, relevance, reliability, and comparability.

Unusual Item

An event or transaction that is not expected to recur frequently or that is unusual in nature, affecting a company's financial statements.

Prior Period

Referring to a previous time frame in financial reporting or analysis.

Unusual Item

A term used in financial accounting to refer to gains or losses that are infrequent or unusual in nature, not part of the company's ordinary operations.