A firm evaluates two projects with identical expected

Q: Answer-A firm evaluates two projects with identical expected cash flows, but Project A has higher variabili...

Risk-averse firms prefer certainty. Given equal expected returns, lower standard deviation risk is preferable. This is aligned with decision-making under uncertainty.

cash flows, but Project A has higher variability. If the firm is risk-averse, what would be its decision?

A Prefer Project A due to potential for high return

B Indifferent to both projects

C Prefer Project with lower standard deviation

D Choose project with higher NPV only

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A firm evaluates two projects with identical expected

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