If a low-risk company invests in a high-risk project,those cash flows should be discounted at a high cost of capital.

Name: If a low-risk company invests in a high-risk project,those cash flows should be discounted at a high cost of capital.
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Quizplus · Accepted Answer

This is because the high-risk project introduces added uncertainty and risk to the company's overall cash flows. Therefore, the company would need a higher expected return to compensate for this added risk, resulting in a higher cost of capital.

If a Low-Risk Company Invests in a High-Risk Project,those Cash