9) A firm is evaluating a very risky project that will cost $50,000 to undertake and is expected to generate net operating cash flows of $20,000 per year for four years. The firms weighted average cost of capital is 20%. An appropriate decision with respect to the project is:

a.

to accept the project as the net present value is $51,774.

b.

to accept the project as the net present value is $1,774.

c.

to recalculate the net present value using a risk-adjusted required return, as it is not correct to evaluate a high-risk project using the weighted average cost of capital.

d.

to apply sensitivity analysis before making a decision to accept or reject the project.

e.

either C or D.