An automatic bias against high-risk projects is created by:

Question

Quizplus · Accepted Answer

Using a higher rate than the cost of capital when applying NPV and IRR to risky projects creates an automatic bias against high-risk projects because the higher rate reflects the additional riskiness of the project, making it harder for the project to generate a positive return. This can make high-risk projects appear less attractive than low-risk projects, even if they have the potential to generate higher returns.

An Automatic Bias Against High-Risk Projects Is Created By