Project a Will Generate $10,000

Multiple Choice

Project A will generate $10,000.00 of revenue next year. Project B will generate $5,000.00 (50% probability) or $15,000.00 (50% probability) of revenue next year. Assuming both projects cost $8,000.00 and have a 10% APR discount rate, which project is preferred by a risk averse manager?

A) Project A
B) Project B
C) Neither project
D) Cannot be determined