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A company's overall weighted average required rate of return is 10 percent. Its yogurt division is riskier than average, its fresh produce division has average
- A company's overall weighted average required rate of return is 10 percent. Its yogurt division is riskier than average, its fresh produce division has average risk, and its institutional foods division has below-average risk. Dandy adjusts for divisional risk by adding or subtracting 2 percentage points. Dandy adjusts for project risk by adding or subtracting 2 percentage points. Thus, the maximum adjustment is plus or minus 2 percentage points for each of these factors. What is the risk-adjusted required rate of return for a low-risk project in the yogurt division?A.6%
- B.8%
- C.10%
- D.12%
- E.14%
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Contemporary Financial Management
Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao
14th edition
1337090581, 978-1337090582
