In capital budgeting, risk refers to . A. the chance that the net present value will be greater than zero B. the chance that the internal rate of return will exceed the cost of capital C. the degree of variability of the initial investment D. the degree of variability of the cash flows

Option D

In capital budgeting, risk refers to the degree of variability of the cash inflows

Explanation:

Capital budgeting is the preparation manner applied to decide whether an organization’s long-term expenses are deservingly persevering. The risk that can occur here includes the potential that a preferred work or activity will begin to a loss. In the circumstances of capital budgeting, the title risk relates to the degree of variability of net cash flows.

The higher the risk, the more prominent the possibility that a project will determine unacceptably. Projects with a little margin of acceptability and a broad scope of anticipated net cash inflows are riskier.

For this case we will first look for the total cost of the purse.
 We then have the following rule of three:
 14.95 $ > 100%
 x > 105%
 Clearing x we have:
 x = (105/100) * (14.95)
 x = 15.6975 $
 The amount needed to buy the purse is:
 15.6975 - 10 = 5.6975 $
 
 holley needs 5.6975 $ to buy the purse