Are retained earnings risk-free why or why not

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Reference no: EM132007109

Suppose your firm is going to finance a new project 100% with retained earnings.

Your boss claims that since the earnings are already being retained and that since no outside financing is required, the project should be evaluated at the risk-free rate of return.

Is this appropriate? Are retained earnings risk-free? Why or why not?

Reference no: EM132007109

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