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Benja is considering investing $ 1 , 5 0 0 in either of two stocks. A or B . She plans to hold the stock

Benja is considering investing $1,500 in either of two stocks. A or B. She plans to hold the stock for exactly 5 years and expects both stocks to pay $90 in annual end -of-year cash dividends. After 5 years, she estimates that she will sell stock A for $1,300 and stock B for $ 1,550. Stock A by Benja's calculation has average risk. stock B is quite a bit riskier. She needs to earn an annual return on an average risk stock of 11% however because stock B is considerably riskier, she will need this return to be 15% from it. Benja has calculated the risk- adjusted net present values (NPVs) for both stocks. Both investments have acceptable (NPVs $0) on a risk- adjusted basis, so which project should she invest in and why?

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