Risk and Present Value
w Higher risk projects require a higher rate of
return.
w Higher required rates of return cause lower
PVs.
374
1.400
PVPV of C 1 $400 at 7%
=
+=
=
barry
(Barry)
#1
Risk and Present Value
w Higher risk projects require a higher rate of
return.
w Higher required rates of return cause lower
PVs.
374
1.400
PVPV of C 1 $400 at 7%
=
+=
=