Question

If a firm's projects differ in risk, then one way of handling this problem is to evaluate each project with the appropriate risk-adjusted discount rate.
A. True
B. False

Answer 1

Answer:

True

Explanation:

the discount rate used for a project should reflect the risk of the project so as to make accurate predictions. if the discount rate used for a project is the same as that of the firm and the risks of the project differs, the predictions made with this project would be inaccurate. the risk adjusted discount rate has to be calculated.