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Risk Measure Project A Project B 6. Within-firm risk and beta risk Understanding risks that affect projects and the impact of risk consideration WSP Inc.
Risk Measure Project A Project B 6. Within-firm risk and beta risk Understanding risks that affect projects and the impact of risk consideration WSP Inc. is involved in a wide range of unrelated projects. The company will pursue any project that it thinks will create value for its stockholders. Consequently, the risk level of the company's projects tends to vary a great deal from project to project. If WSP Inc. does not risk-adjust its discount rate for specific projects properly, which of the following is likely to occur over time? Check all that apply. The firm will make poor capital budgeting decisions that could jeopardize the long-run viability of the company. The firm will become less risky. The firm will reject too many relatively safe projects. How do managers typically deal with within-firm risk and beta risk when they are evaluating a potential project? . Quantitatively .Subjectively Consider the case of another company. Turnkey Printing is evaluating two mutually exclusive projects. They both require a $1 million investment today and have expected NPVs of $200,000. Management conducted a full risk analysis of these two projects, and the results are shown below. Which of the following statements about these projects' risk is correct? Check all that apply. Project B has more stand-alone risk than Project A. Project A has more stand-alone risk than Project B. Project B has more corporate risk than Project A. Project A has more corporate risk than Project B
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