Project A generates $5,000.00 in revenue two years from today and costs $4,000.00. Project B generates $4,000.00 (50% probability)or $6,000.00 (50% probability)one year from today and costs $4,500.00. Assuming a discount rate of 12% for both projects, which project does a risk averse manager prefer?
A)Project A
B)Project B
C)Neither project
D)Cannot be determined

Question

Quizplus · Accepted Answer

The Answer of Project A generates $5,000.00 in revenue two years from today and costs $4,000.00. Project B generates $4,000.00 (50% probability)or $6,000.00 (50% probability)one year from today and costs $4,500.00. Assuming a discount rate of 12% for both projects, which project does a risk averse manager prefer?
A)Project A
B)Project B
C)Neither project
D)Cannot be determined

Project a Generates $5,000