The discount rate that should be used in the net present value calculation to compensate for risk is ________.
A firm is considering investment in a capital project which is described below. The firm's cost of capital is 18 percent and the risk-free rate is 6 percent. The project has a risk index of 1.5. The firm uses the following equation to determine the risk adjusted discount rate, RADR, for each project: RADR = Rf + Risk Index (Cost of capital - Rf)
A) 6 percent
B) 15 percent
C) 18 percent
D) 24 percent
D) 24 percent
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A) Merchant wholesalers B) Discount stores C) Full-service retailers D) Limited-service retailers E) Factory outlets
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Fill in the blank(s) with the appropriate word(s).