# LO 48.6: Compute the adjusted RAROC for a project to determine its viability.

LO 48.6: Compute the adjusted RAROC for a project to determine its viability.
RAROC should be adjusted to consider systematic risk and a consistent hurdle rate.
Adjusted RAROC = RAROC |3p (Rj^ Rp)
where: Rp = risk-free rate = hurdle rate Rm = expected return on market portfolio (3p = firms equity beta (RM Rf ) = excess return over risk-free rate to account for the nondiversifiable systematic risk of the project
Therefore, the revised business decision rules are as follows:

If adjusted RAROC > Rp, then accept the project If adjusted RAROC < Rp, then reject the project