In capital budgeting decisions,the riskiness of a project may be shown by ________.

Question

Quizplus · Accepted Answer

The project's sensitivity to changes in predictions of cash flows is a measure of its riskiness, as a more sensitive project will be more affected by changes in assumptions about future cash flows. The size and timing of cash flows are important factors to consider in capital budgeting, but they do not necessarily indicate the riskiness of a project. The size of cash outflows is also important, but it is not a direct measure of riskiness.

In Capital Budgeting Decisions,the Riskiness of a Project May Be