Project a Generates $5,000

Multiple Choice

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