The risk-adjusted discount rate (RADRs) are the risk-adjustment factors that represent the percent of estimated cash inflows that investors would be satisfied to receive for certain rather than the cash inflows that are possible for each year.

Question

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The statement is incorrect. The RADRs represent the discount rate used to adjust for risk in calculating the present value of future cash flows. It is not a factor representing the percent of estimated cash inflows that investors would be satisfied to receive.

The Risk-Adjusted Discount Rate (RADRs) Are the Risk-Adjustment Factors That