An Automatic Bias Against High-Risk Projects Is Created By

question 49

Multiple Choice

An automatic bias against high-risk projects is created by:

• A) using the IRR technique, which produces an intrinsic return which is risk adjusted.
• B) using a higher rate than the cost of capital when applying NPV and IRR to risky projects.
• C) adjust NPVs and IRRs up when evaluating risky projects.
• D) make an intuitive judgment about risk after the analysis is done.

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