A bakery company is considering one capital budgeting project involvin
QUESTION
A bakery company is considering one capital budgeting project involving the replacement of a sophisticated brick oven, and another capital budgeting project involving research and development into synthetic food substitutes. Which of the following statements is most correct concerning the risk-adjus
Generally we have two types of projects. 1. Replacement projects 2. Expansion projects The firm replace the projects generally to reduce the cots. The investment projects generally increase the revenue. Risk adjusted discount rate is the rate established by adding expected risk
um to the risk free rate. Here higher the Risk adjusted discount rate then more risk associate with the project. Such type of Projecsts we should be rejected.Therefore Option d. is correct.
ANSWER:
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