A company is deciding whether to invest in project A or project B. A decision tree has been prepared to illustrate the investment decision and its associated possible net present values (NPVs).
Which of the following statements is correct?
A.
A risk neutral decision maker would select project B because it shows less variation of outcomes.
B.
Project A is more likely to reduce shareholder wealth than to increase it.
C.
Project A will generate a positive net present value of $1.3m.
D.
decision maker who is risk seeking would select project A.
Chosen Answer:
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