Which of the following statement is true?

Question options:

A manager who adjusts discount rates by using a "fudge factor" is more likely to penalize short-term projects as opposed to long-term projects.

Risky projects can be evaluated by discounting expected cash flows at a risk-free interest rate.

Risky projects can be evaluated by discounting certainty equivalent cash flows at the risk-free interest rate. I

n the certainty equivalent approach, certainty equivalent cash flows are discounted at the risk-adjusted discount rate to calculate the NPV of a project.