What Decision Should Be Made on a Project with Above-Average

question 11

Multiple Choice

What decision should be made on a project with above-average market risk?

• A) Accept if the cash flows discounted at the WACC have a positive NPV.
• B) Discount the cash flows at the IRR and accept if NPV is positive.
• C) Accept if the IRR is greater than the WACC.
• D) Use a higher discount rate than the WACC to reflect the project's risk and accept if NPV is positive at this higher discount rate.

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Definitions:

Genetic and Environmental Factors

Elements that contribute to the development and characteristics of organisms, including inherited genes from parents and conditions of the environment in which the organism lives.

Phenotype

The observable characteristics of a person, including appearance, personality, intelligence, and all other traits.

Genotype

An organism’s entire genetic inheritance, or genetic potential.

Differentiate

To recognize or ascertain what makes someone or something different or to distinguish between two or more things.