Three common methods to incorporate an adjustment for risk into the capital budgeting analysis are the use of risk-adjusted discount rates, sensitivity analysis, and simulation.

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This statement is true. Risk-adjusted discount rates account for the riskiness of the project when determining the appropriate discount rate. Sensitivity analysis looks at the impact of changing certain variables on the project's outcome. Simulation involves creating multiple scenarios and simulating outcomes to determine the range of possible outcomes and associated risks.

Three Common Methods to Incorporate an Adjustment for Risk into the Capital