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use scienfic calculator and expalin please AM Dec 16 2020 SECTION 1 Time Left:0:58:43 Mold Khaled Lahwil: Attempt 1 Previous Page Next Page Page 4

use scienfic calculator and expalin please

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AM Dec 16 2020 SECTION 1 Time Left:0:58:43 Mold Khaled Lahwil: Attempt 1 Previous Page Next Page Page 4 of 9 Question 4 (2 points) The assistant manager evaluated potential investments-that is, capital budgeting projects-using the firm's average required rate of return R. He produced the following report for the capital budgeting manager: Project NPV IRR Risk A $1,000 15% High B -$300 10% Low -$400 9% Average 12% High $200 13% Average The capital budgeting manager usually considers the risks associated with capital budgeting projects before making her final decision. If a project has a risk that is different from average, she adjusts the average required rate of return by adding or subtracting 3 percentage points. If the five projects listed above are independent, what is the discount rate used R and which one(s) should the capital budgeting manager recommend be purchased after taking risk into account? Explain on your exam paper why. He should accept A, B, and E He should accept B, and E He should accept B, and D only He should accept A, and E only O He should accept C, D and E Previous Page Next Page Page 4 of 9

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