Risk adjusted discount rate


In adjusting for risk, which of the following is - "TRUE" - about the risk adjusted discount rate and/or the certainly equivalent methods _____________

(a) The risk-adjusted discount rate allows for the use of varied costs of capital, enabling the large multi-divisional firm to incorporate differing levels of divisional risk into the capital budgeting process,

(b) The risk-adjusted discount rate allows for the separate adjustment for risk and time,

(c) The certainly equivalent method allows for the use of varied costs of capital, enabling the large multi-divisional firm to incorporate differing levels of divisional risk into the capital budgeting process, or

(d) The certainly equivalent method allows for the separate adjustment for risk and time

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Accounting Basics: Risk adjusted discount rate
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