A Firm Is Evaluating the Relative Riskiness of Two Capital $\text { Net Present Value }$

question 18

Multiple Choice

A firm is evaluating the relative riskiness of two capital budgeting projects. The following table summarizes the net present values and associated probabilities for various outcomes for the two projects.
$\text { Net Present Value }$

$\begin{array}{rrr}\text { Probability }&\text { Project A }&\text { Project B }\\\hline 0.25 & -\$ 5,000 & 0 \\0.50 & 4,000 & \$ 2,000 \\0.25 & 10,000 & 8,000\end{array}$
-The expected net present value for projects A and B are

• A) $4,000 and $1,500, respectively.
• B) $2,000 and $1,000, respectively.
• C) $3,000 and $3,300, respectively.
• D) $3,250 and $3,000, respectively.