Assume that upon receiving your recommendations to accept a project, the CEO of
ID: 2750415 • Letter: A
Question
Assume that upon receiving your recommendations to accept a project, the CEO of your employer says the project is riskier than you've assumed in your analysis and directs you to make adjustments to take into account the perceived increased riskiness. The most logical and likely reaction will be to Many analysts consider the to be a good indicator of the value of a stock in relative terms. It is calculated as the current market value of the stock dividend by the earnings on a per share basis. Which of the five capital budgeting decision methods is both the easiest to compute and also the only one which completely ignores the time value of money? Same Ball Enterprises is a small firm and some managers worry about how soon the firm will receive cash flows from its investments. As a result, the CFO wants to know how long it will take Project Tokyo to pay back its original investment. Project Tokyo's expected net cash flows are shown below: What is Project Tokyo's traditional payback period? Opportunity cost is the return on the best alternative use of an asset...Explanation / Answer
Required and project risk has linear relationship. If risk increases required return will increase and vice-versa. Here risk increase so required return will also increase.
Hence, correct option is (d) increased the required rate of return.