I have figured out the first half but cant figure out the second half or true or false.

Attempts:Keep the Highest:6 4. Certainty equivalent approach Another procedure by which to evaluate project risk is the certainty equivalent approach. Under this approedh, a project's expected future cash fows are ad justed from their forecasted-and generally isky-values to their valent certain, or guaranteed, values. Thus, each certainty equivalent cash flow represents a risk-free cash flow that the decision-maker considers to be equal to the riskier cash flow. Consider the case of the Happy Giraffe Construction Company: pany has forecasted cash flows expected from a planned investment project. Considering its uncertain The com economic conditions, the firm's managers want to adjust the project's risk and then estimate its net present value (NPV) using the certainty equivalent factor approach. You've been assigned to complete this analysis. Using the data 7% as the tax-adjusted risk-free rate in your analysis. Remember, the firm's cost of capital reflects the average riskiness of the company, and using the firm's cost of capital in your analysis would lead to a double counting of the project's risk. available to you in the following table, complete the certainty equivalent analysis for the project. Use Happy Giraffe Construction Company: Calculation of Certainty Equivalent Net Present Value Certainty Equivalent Factor (a) 1.00 0.95 0.85 0.80 0.70 Expected NCF Certainty Equivalent Cash Flow -$40,000 $34,200 $27,200 $24,000 $18,200 Present Value of Cash Flows -$40,000 Year 0 $40,000 1 $36,000 2$32,000 3 $30,000 4$26,000 True or False: Since managers and financial decision makers estimate the certainty equivalent factor, the estimates are most likely to reflect managers' perceptions of risk rather than shareholder risk. False O True