NO.PZ201601200500000805
问题如下：
5. Should the capital budgeting committee accept the internal auditor’s first and second suggestions, respectively?
选项：
A. No for Suggestions 1 and 2.
B. No for Suggestion 1 and Yes for Suggestion 2.
C. Yes for Suggestion 1 and No for Suggestion 2.
解释：
A is correct.
Both suggestions are bad. In valuing projects, expected cash flows should be discounted at required rates of return that reflect their risk, not at a risk-free rate that ignores risk. Even though both options cannot be simultaneously exercised, they can both add value. If demand is high, you can exercise the growth option, and if demand is low, you can exercise the abandonment option.
suggestion 1感觉不对，但是又不确定，请解释一下
