Ques. 2 (a) Explain Certainty-Equivalent Approach in evaluating the riskiness of a project.
(b) A project costs Rs.6,000 and it has cash flows of Rs.4,000, Rs.3,000, Rs.2,000 and
Rs.1,000 in years 1 through 4. Assume that the associated αt factors are estimated
to be: a0 = 1.00 a1 = 0.90, a2 = 0.70, a3 = 0.50 and a4 = 0.30, and the risk-free
discount rate is 10 percent.
Will you advice the project to be selected.
Ques. 3 (a)Should the company restructure its business? What
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