25. The risk-adjusted discount rate approach is preferable to the weighted cost of capital approach when (Points : 3) all projects have the same risk characteristics the risk-free rate is known with certainty the projects under consideration have different risk characteristics the firm is unlevered

Question 26. 26. Injection Aluminium Mines, Inc. is considering adoption of a new project requiring a net investment of $10 million. The project is expected to generate 5 years of net cash inflows of $5 million per year. In the project's sixth, and final year, it is expected to have a net cash outflow of $1 million. What is the project's risk adjusted net present value? The company's cost of capital is 7% but projects of this nature are usually judged by a risk adjusted rate that is 5% higher than cost of capital. (Points : 3)

about $8.52 million about $8.00 million about $7.52 million none of the above

Question 27. 27. The expected rate of return for 3COM is 18 percent, with a standard deviation of 10.98 percent. The expected rate of return for Just the Fax is 25 percent with a standard deviation of 15.86%. Which firm would be considered the riskier from a total risk perspective? (Points : 3)

3COM Just the Fax Neither, both have the same risk Cannot be determined