Using the risk-adjusted discount rate approach,projects with high coefficients of variation will have ______ net present values than projects with low coefficients of variation.

Question

Quizplus · Accepted Answer

The risk-adjusted discount rate approach considers the risk of a project by adjusting the discount rate based on the project's coefficient of variation. Projects with high coefficients of variation are considered riskier, and thus require a higher discount rate to account for the increased risk. This results in a lower net present value for these projects compared to projects with low coefficients of variation. Therefore, the correct answer is C, lower.

Using the Risk-Adjusted Discount Rate Approach,projects with High Coefficients of Variation