The financial manager selecting one of two projects of differing risk should sel

Question

The financial manager selecting one of two projects of differing risk should

select the project with the larger risk-adjusted net present value.

choose the project with less risk even though that project has less return.

choose the project with greater return even if that project has greater risk.

choose the project with the least relative risk.

select the project with the larger risk-adjusted net present value.

choose the project with less risk even though that project has less return.

choose the project with greater return even if that project has greater risk.

choose the project with the least relative risk.

Explanation / Answer

Answer;

The financial manager selecting one of two projects of differing risk should select the project with the larger risk-adjusted net present value.

Because the Adjusted net present value covers risk and return aspects and I the Adjusted net present value is positive it means even after having risk the project will earn positive cash flows.

Hence the answer is :

select the project with the larger risk-adjusted net present value.

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