Consider the following equally likely project$$ outcomes:

Profit

X Y

Pessimistic prediction$$ $ $0$ $$500$

Expected outcome$$ $ $500$ $$500$

Optimistic prediction$$ $$1000$ $$500$

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Part $1$

A$.$

Investors will reject both projects because the profit is too low.

B$.$

Investors will prefer project X because it potentially offers a higher profit.

C$.$

Since Projects X and Y have the same expected outcomes of$$ $$500,$ investors will view them as identical in value.

D$.$

Investors will prefer project Y because the expected return is the same as for project X but the outcome is certain.