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What type of adjustment to weighted-average cost of capital

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Problem 1: A manager who tends to be risk averse is setting a discount rate to be used for investment projects. The manager will likely apply what type of adjustment to the weighted-average cost of capital (WACC) for a risky project?

Option 1: The discount rate is not related to the WACC.

Option 2: Set a discount rate that is lower than the WACC.

Option 3: No change; use the WACC as the discount rate.

Option 4: Set a discount rate that is higher than the WACC.

Reference no: EM132939824

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