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Risk may be integrated into capital budgeting decisions

October 14, 2022

Risk may be integrated into capital budgeting decisions by adjusting the time horizon. adjusting the standard deviation of possible outcomes. determining the expected value. adjusting the discount rate.

1 Answers

  • Raleigh Mischke
    25 days ago

    Discount rates are required rates. These required rates are adjusted with appropriate adjustment factors for risky projects. Projects with high risk will have high adjustment factors and vice-versa.

    Hence, correct option is “adjusting the discount rate”.

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