The capital budgeting manager of Lowe\'s submitted the following report to the C

Question

The capital budgeting manager of Lowe's submitted the following report to the CFO:

Project:              IRR               Risk

A                         9%               Low

B                        10%           Average

C                        12%              High

Lowe's generally takes risk into consideration by adjusting its average required rate of return (r), which equals 8%, when evaluating projects with risks that are either substanitally lower or substantially higher than average. A 5% adjustment is made for the high-risk projects, and a 2% adjustment is made for the low-risk projects.  If the above projects are independent, which project(s) should Lowe's purchase?

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