Which of the Following Procedures Best Accounts for the Relative

question 59

Multiple Choice

Which of the following procedures best accounts for the relative risk of a proposed project?

• A) adjusting the discount rate downward if the project is judged to have above-average risk.
• B) reducing the npv by 10% for risky projects.
• C) picking a risk factor equal to the average discount rate.
• D) ignoring risk because project risk cannot be measured accurately.
• E) adjusting the discount rate upward if the project is judged to have above-average risk.

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