In the fill in the blank the choices are (stand-alone risk )or (a risk adjusted

Question

In the fill in the blank the choices are (stand-alone risk )or (a risk adjusted cost of capital) or (corporate, or within-firm, risk) or (market risk)

United Recycling Inc. is one of the largest recyclers of glass and paper products in the United States. The company is looking into expanding into the cardboard recycling business. The company's CFO has performed a detailed analysis of the proposed expansion The company's CFO hired a third-party consulting firm to estimate the cost per ton of processing the cardboard. The consulting firm's cost estimate for processing the cardboard was significantly higher than what the CFO had been using in his financial model Based on the information given, determine which of the statements is correct. O When the CFO adjusts the cost per ton of processing the cardboard, the project's NPV will increase. When the CFO adjusts the cost per ton of processing the cardboard, the project's NPV will decrease. Evaluating risk is an important part of the capital budgeting process. Which of the following represents the project's risk to the corporation as opposed to investors' risks? O Stand-alone risk Market, or beta, risk O Corporate, or within-firm, risk When dealing with , diversification is totally ignored

Explanation / Answer

option 2 : when adjusted NPV decreases

standalone risk

with standalone risk, diversification is ignored

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.