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Which project should PPP purchase

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Reference no: EM132698622

Problem - Following are three independent projects Peanut/Pecan Processing (PPP) is evaluating:

Project

IRR

Risk

P

10.0%

Low

Q

12.0

Average

R

14.5

High

PPP generally considers risk when examining projects by adjusting its average required rate of return, r, which equals 11 percent. A 4 percent adjustment is made for high-risk projects, and a 2 percent adjustment is made for low-risk projects. Which project(s) should PPP purchase?

Reference no: EM132698622

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