If the risk of an investment project differs from the overall firm’s risk then: the project’s discount rate must be adjusted based on the risks of the project’s cash flows. the project’s initial cost should be increased/decreased to account for the increase/decrease in risk. the average rate used for all prior projects should be used as the new project’s discount rate. the market rate of return should be used as the project’s discount rate. the project’s discount rate must be adjusted based on the sources of project financing.

Aplant manager is considering buying additional stamping machines to accommodate increasing demand. the alternatives are to buy 1 machine, 2 machines, or 3 machines. the profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. the payoff table below illustrates the profits realized (in $000's) based on the different scenarios faced by the manager. alternative bid accepted bid rejected buy 1 machine $10 $5 buy 2 machines $30 $4 buy 3 machines $40 $2 refer to the information above. assume that based on historical bids with the defense contractor, the plant manager believes that there is a 65% chance that the bid will be accepted and a 35% chance that the bid will be rejected. what is the expected value under perfect information (evpi)?