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Two projects carry the same risk but return 10 and 12 per cent. Normally the firm picks:
AThe 12 per cent project
BThe 10 per cent project
CNeither of the projects
DBoth in equal measure
Answer & Solution
Correct answer: A. The 12 per cent project
1. Rate of return is the most important criterion.
2. Risk is the same for both.
3. So the higher-return project is selected.
_Source: NCERT Class 12 Business Studies Part II, Chapter 9, Financial Management._
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