Which of the following procedures best accounts for the relative risk of a proposed project? Select...

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Which of the following procedures best accounts for the relative risk of a proposed project? Select one: a. Adjusting the discount rate downward if the project is judged to have above-average risk. b. Reducing the cash flows by 10% for risky projects. c. Picking a risk factor equal to the average discount rate. d. Ignoring risk because project risk cannot be measured accurately. e. Adjusting the discount rate upward if the project is judged to have above-average risk. Which of the following is NOT a relevant cash flow and thus should not be reflected in the analysis of a capital budgeting project? Select one: a. Shipping and installation costs. b. Cannibalization effects. c. Opportunity costs. d. Sunk costs that have been expensed for tax purposes. e. Changes in net working capital. Which of the following procedures best accounts for the relative risk of a proposed project? Select one: a. Adjusting the discount rate downward if the project is judged to have above-average risk. b. Reducing the cash flows by 10% for risky projects. c. Picking a risk factor equal to the average discount rate. d. Ignoring risk because project risk cannot be measured accurately. e. Adjusting the discount rate upward if the project is judged to have above-average risk. Which of the following is NOT a relevant cash flow and thus should not be reflected in the analysis of a capital budgeting project? Select one: a. Shipping and installation costs. b. Cannibalization effects. c. Opportunity costs. d. Sunk costs that have been expensed for tax purposes. e. Changes in net working capital.

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Part A e Adjusting the discount rate upward if the project is judged to have ab... View the full answer