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Discussion Assume the market suddenly becomes more risk averse (think coronavirus, civil unrest, political unrest, etc.). What would be the effect on required rates of
Discussion
- Assume the market suddenly becomes more risk averse (think coronavirus, civil unrest, political unrest, etc.). What would be the effect on required rates of return and why? In turn, what would be the effect on NPV for the above projects? Explain.
- How would a change in the required rate of return affect the projects internal rate of return (IRR)? Explain. Would the accept/reject decision change using the IRR analysis method? Explain.
- What are the reinvestment rate assumptions for NPV vs. IRR?
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Public Finance
Authors: Harvey S Rosen, Ted Gayer
9th International Edition
0071267883, 9780071267885
