Question
Select the best answer 17. WeCare HMO is evaluating a new project. It has a coefficient variation (CV) of 5, while the HMO's average project
Select the best answer
17. WeCare HMO is evaluating a new project. It has a coefficient variation (CV) of 5, while the HMO's average project has a CV of 2-3. The business's corporate cost of capital is 10 percent, and the typical adjustment for the project risk is the three percentage points. What is the project cost of capital? (Hint: CV is a measure of project risk)
a. 7%
b. 10%
c. 13%
d. 16%
e. 19%
18. Which of the following statements about project cash flow estimation is incorrect?
a. inflation effects should be included
b. The effects on a business's other projects should be included
c. Opportunity costs should be included
d. Sunk costs should be included
e. Strategic value should be included
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