Why Should a Risk Averse Manager Select One Project Over

question 98

Multiple Choice

Why should a risk averse manager select one project over another when both projects generate the same NPV?

• A)Because the manager prefers the project which has more variance in its cash flows.
• B)Because the manager prefers the project with the higher IRR.
• C)Because the manager prefers the project with less risky cash flows.
• D)Because the manager prefers the project which has higher standard deviation in its cash flows.

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Definitions:

Planning Stage

Refers to the initial phase in a project or process where objectives are defined, resources are allocated, and the approach is formulated.

Revising

The process of reviewing and altering a document or artwork to improve it or to reflect changes.

Editing

The process of reviewing, correcting, and preparing written material for publication or presentation.

Planning

The process of making plans for something, involving the creation and organization of a sequence of actions to achieve specific goals.