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

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.
$\text { Net Present Value }$
$\begin{array}{rrr}\text { Probability }&\text { Project A }&\text { Project B }\\0.25 & -\$ 5,000 & 0 \\0.50 & 4,000 & \$ 2,000 \\0.25 & 10,000 & 8,000\end{array}$
-The firm should

A) choose project B since it has a lower standard deviation.
B) choose project A since it has a lower relative risk.
C) choose project B since it has a lower relative risk.
D) choose project A since it has a higher net present value potential.