In capital budgeting:

Question

Quizplus · Accepted Answer

A) If a firm accepts projects without regard for risk, then the company can change its overall risk profile as perceived by investors, this means that the firm may take on projects that increase its risk beyond what investors are willing to accept, which can result in a drop in the stock price.
B) Projects are thought to be incremental to the normal business of the firm, meaning that they are separate and additional to the ongoing business activities of the firm.
C) Risk is important and should be included in the analysis, but often it is not considered. However, incorporating risk into the analysis is crucial as it can impact the overall profitability of a project.

In Capital Budgeting