Question: A firm is considering a new project whose risk is greater than the risk of the firm's average project, based on all methods for assessing
A firm is considering a new project whose risk is greater than the risk of the firm's average project, based on all methods for assessing risk. In evaluating this project, it would be reasonable for management to do which of the following? O a. Reject the project, because its acceptance would increase the firm's risk b. Ignore the risk differential of the project would amount to only a small traction of the firm's total assets. Increase the estimated NPV of the project to reflect its greater risk d. Increase the estimated IRR of the project to reflect its greater risk e. Increase the cost of capital used to evaluate the project to reflect its higher than average risk
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