Ziker Golf Company evaluated a project as a risky project. Ziker generally evaluates projects that are riskier than average by adjusting its required rate of return by 4 percent. If Ziker expects 12% return on average risk projects, then it should expect a return of _____ for a risky project.
A) 8%
B) 12%
C) 16%
D) 10%
E) 48%

Question

Quizplus · Accepted Answer

Ziker adjusts its required rate of return by 4% for riskier projects, so the expected return on a risky project would be 12% + 4% = 16%.

Ziker Golf Company Evaluated a Project as a Risky Project