Your client is considering the acquisition of a small competitor; however, she is nervous about the purchase. What might she do to account account for risky future cash flows in her net-present-value analysis?

1. require a higher risk adjusted rate of return in the analysis

2. require a lower hurdle rate

3. project more conservative future cash flows

4. assume a higher earnings growth rate

a. 1 and 3

b. 2 and 3

c. 1 and 4

d. 3 and 4