A firm is considering a new project whose risk is greater than the risk of the firms 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 Question 13 options Increase the cost of capital used to evaluate the project to reflect the projects higher than average risk Reject the project, since its acceptance would increase the firms risk Increase the estimated IRR of the project to reflect its greater risk Ignore the risk differential if the project would amount to only a small fraction of the firms total assets

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Question: A firm is considering a new project whose risk is greater than the risk of the firms average project, based on all methods for assessing

A firm is considering a new project whose risk is greater than the risk of the firms 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?

Question 13 options:

	Increase the cost of capital used to evaluate the project to reflect the projects higher-than-average risk.
	Reject the project, since its acceptance would increase the firms risk.
	Increase the estimated IRR of the project to reflect its greater risk.
	Ignore the risk differential if the project would amount to only a small fraction of the firms total assets.

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