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What is the new discount rate

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Problem 1: In talking with advisors about the project, due to uncertainty, a suggestion was made that the discount rate was about 30% too low. Calculate what the new discount rate would be following this suggestion. (Note: it is not 37.75% That would be over 400% increase!) What is the new discount rate, and what impact does this have on the project? Given the other implications to the company as presented in the case, and the fact that the cost of capital is 7.75%, what recommendation would you give Mr. Hansson?

Reference no: EM132617202

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