A company borrows $4 to finance a project. It has two choices when beginning the project....

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A company borrows $4 to finance a project. It has two choices when beginning the project. The first option has potential payoff of either $2 or $8 (both equally likely). The second option has potential payoffs of $0 or $16 (both equally likely). The lender would prefer the _____ option because the expected value of the first option is _ and the expected value of the second option is Correct Answer first; $3; $2 You Answered first; $8; $5 second; $5; $8 second; $16; $4 A company borrows $4 to finance a project. It has two choices when beginning the project. The first option has potential payoff of either $2 or $8 (both equally likely). The second option has potential payoffs of $0 or $16 (both equally likely). The lender would prefer the _____ option because the expected value of the first option is _ and the expected value of the second option is Correct Answer first; $3; $2 You Answered first; $8; $5 second; $5; $8 second; $16; $4