Question

Chovita sports company evaluated a project as a low-risk project. chovita generally evaluates projects that are less risky than average by adjusting its required rate of return by 2 percent. if chovita expects 12% return on average risk projects, then it should expect a return of

Answer 1

Since the average risk project  is estimated to be a 12% rate of return, then adjusting for a lower risk than average project should expect a rate of return of 2 % less or 10% since in investments the higher risk investments usually get a higher rate of return.