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Evaluating a new investment opportunity

1. A financial manager evaluating a new investment opportunity should assess:

only the cash requirements of the project.

the risks and returns of the investment without regard to other investments.

how the project compares with the average project of the firm.

the resources that the opportunity will consume.

1. For investments involving significant risk, the cost of capital is equal to the:

risk-free interest rate plus an appropriate risk premium.

rate of return on the investment.

NPV of the future income from the investment.

systematic risk of the investment.

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1. A financial manager evaluating a new investment opportunity should assess:

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