2 Camera R Amount Probability $4,000 1.00 Camera S Amount Probability $4,000 1.00 tul Initial investment Annual rate of return Pessimistic Most likely Optimistic 20% 25% 30% 0.25 0.50 0.25 15% 25% 35% 0.20 0.55 0.25 risk Risk and probability Micro-Pub, Inc., is considering the purchase of one of two microfilm cameras, R and S. Both should provide benefits over a 10-year period, and each requires an initial investment of $4,000. Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results a. Determine the range for the rate of return for each of the two cameras b. Determine the value of the expected return for each camera c. Which camera purchase is riskler? Why? a. The range for the rate of retum for camera is % (Round to the nearest whole number) The tange for the role of rotum for camera Sis. (Round to the nearest whole number) b. The value of the expected return for camera [% (Round to two decimal places) The value of the expected return for camera S is % (Round to two decimal places) c. Which camera purchase is riskier? Why? (Select from the drop-down menus.) The purchase is riskler because it has a range for the rate of return the range for the rate of return for camera Sis%. (Round to th b. The value of the expected return for camera Ris %. (Round te The value of the expected return for camera Sis %. (Round to two c. Which camera purchase is riskier? Why? (Select from the drop-dou The purchase of is riskier because it has a range Enter your answe camera S nswer boxes. camera R wy n for camera Ris%. (Round to the nearest whole numb or camera Sis \%. (Round to the nearest whole number.) turn for camera Ris [%. (Round to two decimal places.) rn for camera Sis [%. (Round to two decimal places.) s riskier? Why? (Select from the drop-down menus.) is riskier because it has a range for the rate of return. of the answer boxes. smaller larger