Explore BrainMass

Explore BrainMass

    Project and risk

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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?

    © BrainMass Inc. brainmass.com June 3, 2020, 6:31 pm ad1c9bdddf

    Solution Preview

    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.