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A firm is considering an investment in a risky project that offers a 10 percent rate of return. Alternative investments with the same level of

A firm is considering an investment in a risky project that offers a 10 percent rate of return. Alternative investments with the same level of risk offer a 15% rate of return. If the company makes the investment, their value will:

Options

increase.

increase, and then decrease.

stay the same.

It cannot be determined what will happen to the firm value.

decrease.

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