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.
Answer: E
You might also like to view...
What is the primary objective of a plan?
A. It outlines how goals are going to be met. B. It explains the company's slogan. C. It provides information about company financials for stakeholders. D. It guides ethical decision making. E. It sets research and development priorities.
Dividend yield ratio
a. Market price per share b. Net sales c. Average inventory outstanding d. Interest expense, net of tax e. Common dividends per share f. Preferred dividends per share g. Weighted average number of common shares outstanding h. Total stockholders' equity
A good friend has opened up a para-sailing business in Panama City, Florida. In order to advertise the business to spring break tourists, you suggest that he hire a skywriter to fly along the beaches during the day. This form of advertising is considered:
A. radio advertising B. direct marketing C. print advertising D. non-traditional advertising E. outdoor advertising
Employees with the same job classification are entitled to the same fringe benefits
Indicate whether the statement is true or false