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If the Risk of an Investment Project Is Different Than

Question 1

Multiple Choice

If the risk of an investment project is different than the firm's risk then:


A) you must calculate the discount rate for the project based on the firm's risk.
B) you must calculate the discount rate for the project based on the project risk.
C) you must exercise risk aversion and use the market rate.
D) an average rate across prior projects is acceptable because estimates contain errors.

Correct Answer:

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