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Where Is the Default Risk Associated with a Project Incorporated

Question 43

Multiple Choice

Where is the default risk associated with a project incorporated in the NPV analysis?


A) in the cost of capital, which is the discount rate used
B) in both the expected future cash flows of the project and the cost of capital for the project
C) in the expected future cash flows of the project
D) The default risk should never be considered in an NPV analysis since it cannot be known with certainty.

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