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