A firm is considering the purchase of an asset whose stand-alone risk is greater than the average risk of its existing portfolio of assets. In evaluating this asset, the decision maker should:
A. increase the internal rate of return (IRR) used to evaluate the asset to reflect its higher risk.
B. increase the asset's net present value (NPV) to reflect its higher risk.
C. reject the asset because its acceptance would clearly decrease the value of the firm.
D. ignore the asset's higher risk if, after purchase, it will make up only a small fraction of the firm's total assets.
E. increase the required rate of return that is used to evaluate the asset to reflect its higher risk.
Answer: E
You might also like to view...
______ is a feeling of nervousness, doubt, and confusion arising from being in a foreign and unfamiliar environment.
A. Conditioning B. Culture shock C. Naturalization D. Accustoming
According to the text, why would some organizations not be enthusiastic about employees acting entrepreneurially inside a company?
a. Fear that workers will prioritize their entrepreneurial efforts over their essential job duties b. Fear that trade secrets will be accidentally released to the public. c. Fearthatthey will leave the company and start their own business. d. Fear that they will not seek approval from senior managers before starting work on their entrepreneurial initiatives.
WiMAX is a coding process that takes a digital map feature and assigns it an attribute that serves as a unique ID (tract number, node number) or classification (soil type, zoning category). GIS professionals are certified in geocoding practices to ensure industry standards are met when classifying spatial data.
Answer the following statement true (T) or false (F)
Define service level
What will be an ideal response?