A manager who adjusts discount rates by using a "fudge factor" is more likely to penalize short-term projects as opposed to long-term projects.

Question

Quizplus · Accepted Answer

Adjusting discount rates with a "fudge factor" typically increases the discount rate to account for risk or uncertainty, which disproportionately affects the present value of long-term projects more than short-term projects, due to the compounding effect of the discount rate over a longer period.

A Manager Who Adjusts Discount Rates by Using a "Fudge