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The firm will become more valuable. The firm could potentially reject projects that provide a higher rate of return than the company requires. The firm's
The firm will become more valuable. The firm could potentially reject projects that provide a higher rate of return than the company requires. The firm's overall risk level will increase. Generally, a positive correlation exists between a project's returns and the returns on the firm's other assets. If this correlation is alone risk will be a good proxy for within-firm risk. 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 B has more market risk than Project A. Project B has more corporate risk than Project A. Project A has more stand-alone risk than Project B
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