Which of the following procedures does the text say is used most frequently by businesses when they do capital budgeting analyses? O a Differential project risk cannot be accounted for by using risk-adjusted discount rates because it is highly subjective and difficult to justify, it is better to not risk adjust at all O b. Monte Carlo simulation uses a computer to generate random sets of inputs, those inputs are then used to determine a trial NPV and a number of trial NPUs are averaged to find the project's expected NPV. Sensitivity and scenario analyses, on the other hand, require much more information regarding the input variables, including probability distributions and correlations among those variables. This makes it easier to implementasimulation analysis than a scenario or sensitity analysis, hence simulation is the most frequently used procedure Other things held constant. ut returns on a project are thought to be positively correlated with the returns on other firms in the economy, then the projects NPV will be found using a lower discount rate thon would be appropriate if the project's returns were negatively correlated Od. The firm's corporate, or overall WACC is used to discount al project cash flows to find the projects NPVS. Then, depending on how rsky different projects are judged to be the calculated NPV are scaled up or down to adjust for differentiatisk O. The replacement chain common el approach and the equivalent annual annuity (EAA) approach must be used to evaluate independent projects with unequal lives; however, neither approach may be used to evaluate mutually exclusive projects with unequal lives