Norman Company wants to choose the better of two investments, A and B. Each requires an initial outlay of $10,000 and each has a most likely annual rate of return of 15%. Management has estimated the returns associated with each investment. Asset A appears to be less risky than asset B. The risk averse decision maker would prefer asset A over asset B, because A offers the same most likely return with a lower range (risk). TABLE 8.2 Assets A and B Asset A Asset B Initial investment $10,000 $10,000 Annual rate of return Pessimistic 13% 7% Most likely 15% 15% Optimistic 17% 23% 4% 16% Range