The correct answer is A. Increased.
The risk-adjusted discount rate (RADR) is a discount rate that is adjusted to reflect the risk of a particular investment. The RADR is higher than the normal rate of discount because investors demand a higher return for taking on more risk.
The RADR is calculated by multiplying the normal rate of discount by a risk premium. The risk premium is a percentage that is added to the normal rate of discount to reflect the additional risk of the investment.
The RADR is used to calculate the present value of future cash flows from an investment. The present value is the amount of money that would need to be invested today in order to have the desired amount of money in the future.
The RADR is an important tool for investors because it allows them to make informed decisions about whether or not to invest in a particular project. The RADR takes into account the risk of the project and the potential return on investment.
Here is a brief explanation of each option:
- A. Increased: The RADR is higher than the normal rate of discount because investors demand a higher return for taking on more risk.
- B. Decreased: The RADR is not decreased because investors demand a higher return for taking on more risk.
- C. Unchanged: The RADR is not unchanged because investors demand a higher return for taking on more risk.
- D. None of the above: The correct answer is A. Increased.