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    Project and risk

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    If the risk of a project substantially increased for a company, how would this increase affect each capital budgeting method (payback, discounted payback, NPV, IRR, PI, and MIRR) for that company?

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    If the risk for a project increased substantially, then the discount rate would be revised upwards to incorporate this increased risk. The discouting rate would be increased.

    Payback - The payback erpiod does not discount the cash flows and hence there would be no ...

    Solution Summary

    The solution explains the impact on payback, discounted payback, NPV, IRR, PI, and MIRR of a company undertaking a highly risky project.