Your client is considering the acquisition of a small competitor; however, she is nervous about the purchase. What might she do to account account for risky future cash flows in her net-present-value analysis?
1. require a higher risk adjusted rate of return in the analysis
2. require a lower hurdle rate
3. project more conservative future cash flows
4. assume a higher earnings growth rate
a. 1 and 3
b. 2 and 3
c. 1 and 4
d. 3 and 4