What should abc decision maker do

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ABC Corp. is considering investing in a project whose risk is greater than the current risk of the firm.

What should ABC's decision maker do?

1) Increase the internal rate of return (IRR) of the project to reflect the risk increase

2) Reject the project, as its acceptance would increase the risk of the firm

3) Ignore the risk differential if the project to be accepted would comprise only a small fraction of the total assets of the firm

4) Increase the cost of capital used to evaluate the project to reflect the higher risk of the project

Reference no: EM132224114

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