Company A is a public corporation specializing in the production of smart phones. Currently, Company A is evaluating a project to produce a next-generation smart phone. The management of Company A knows that Company B, a newcomer to the industry, is also planning to introduce a next-generation smart phone. In the recent past, Company A has applied a cost of capital of 12% in valuing smart phone projects. However, the CEO objects to using the same cost of capital for the new smart phone project, saying, "This time, we are facing additional risk. If Company B's new smart phone turns out to be technologically superior to ours, then our cash flow will be $10 million lower than our projections. To account for the additional risk in cash flows, we should use a higher discount rate than we normally use." Do you agree with the CEO? Please provide the rationale behind your answer.