Question
Which of the following statements is correct? Capital budgeting projects with fairly risky cash flows should be evaluated using relatively high discount rates (required rates
Which of the following statements is correct?
Capital budgeting projects with fairly risky cash flows should be evaluated using relatively high discount rates (required rates of return). | ||
If managers want to maximize the firm's stock value, they should not be concerned with risk when making capital budgeting decisions. | ||
If a firm evaluates all capital budgeting projects using its existing required rate of return, its overall risk, as measured by its beta coefficient, probably will decline over time. | ||
If a firm has a beta coefficient that is less than 1.0, its existing required rate of return will be negatively correlated with the returns on most of the capital budgeting projects it evaluates in the future. |
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