4 Search this course 0 Chapter 10 Assignment WSP Inc. is involved in a wide range of unrelated projects. The company will pursue any project that it will create value for todos Consequently, the risk level of the company's projects tends to vary a great deal from project to pet x als A-Z If WSP te does not risk adjust its discount rate for specific projects property, which of the following is bely to the mat The firm will become more valuable The firm could potentially reject projects that provide a higher rate of retum than the com The firm's overall risk level will increase When a project involves an entirely new product line, the firm may be able to obtain bata from calculate a weighted averape cost of capital for its new product line Consider the case of another company Chrome Printing is evaluating two mutually exclusive projects. They both require 1 million investment Maecede of $200.000 Management conducted a full risk analysis of these two projects and the results shown bel cory Risk Measure Standard deviation of project's expected Project beta Correlation coeffident of project cashows ( rove to the time in rects) Project A 530.000 03 02 Project 0 3120,000 11 09 2 Chapter 10 Assignment Consider the case of another company: bols Chrome Printing is evaluating two mutually exclusive projects. They both require a $1 million Investment today and have expected NPVs of $200,000 Management conducted a full risk analysis of these two projects, and the results are shown below. Project A $80,000 Projects $120,000 Risk Measure Standard deviation of project's expected NPS Project beta Correlation coefficient of project cash flows (relative to the firm's existing projects 0.9 1.1 0. 0.9 s Which of the following statements about these projects risk is correct? Check all that apply Lictory Project A has more stand-alone risk than Project B. Project has more market risk than Project A. Project B has more stand-alone risk than Project A 3D Project has more corporate risk than Project A