Finance Quiz
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CAPITAL BUDGETING
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A company is evaluating a 10-year project. The initial investment and the cash flows for years 1-5 are considered low risk, as they are contractually secured. However, the cash flows for years 6-10 are highly uncertain and depend on future technological developments. A single project beta has been estimated. Which of the following is the most significant weakness in using a single risk-adjusted discount rate to calculate the project's NPV?
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