In this study, the meaning of the words "risk" and "uncertainty" will be explained as well as the Various methods avilable to incorporate them into economic analysis. The emphasis has been focused on incorporating risk into capital budgeting process. The most common measure of risk in economic and financial literature is the standard deviation, which measures the dispersion around the mean of a distribution of possible outcomes. The coefficient of variation, which puts the standard deviation on a relative basis, helps in comparing projects with unequal expected net present values. The calculation-of the expected net present value and deviation for multi-period projects under conditions of statistical independence is also discussed. On real business situations, these computing are often not employed because of their complexity. Instead, the discount rate is frequently adjusted to incorporate risk. The risk-adjusted discount rate (RADR) is a dominant technique in business.
