Risk analysis Solar Designs is considering an investment in an expanded product line. Two possible types of expansion are under review. After investigating the possible outcomes, the company made the estimates shown in the following table. The pessimistic and optimistic outcomes occur with a probablity of 25%, and the most likely outcome occurs with a probability of 50%. a. Determine the range of the rates of return for each of the two projects. b. Which project is less risky? c. If you were making the investment decision, which one would you choose? What does this imply about your feelings toward risk? d. Assume that expansion B's most likely outcome is 23% per year and that all other facts remain the same. Does this change your answer to part c? a. The range for the rate of retum for expansion Ais %. (Round to the nearest whole number.) The range for the rate of retum for expansion B is %. (Round to the nearest whole number.) b. Which project is less risky? (Select from the drop-down menus.) is less risky because it has a range for the rate of return. C. If you were making the investment decision, which one would you choose? What does this imply about your feelings toward risk? (Select the best answer below.) O A. Since the average return for both projects is the same and the initial investments are equal, the answer depends on your risk preference. Since the retums on Project B are more volatile, so a risk-averse investor would prefer Project A. O B. Choose expansion B because it has a higher optimistic rate of return regardless of its risk. O c. Choose expansion A because it is less risky and thus a better investment. OD. Since the most likely return for both projects is the same, you can choose either project regardless of your risk preference, d. Assume that expansion B's most likely outcome is 23% per year and that all other facts remain the same. Does this change your answer to part c? (Select the best answer below.) O A. Yes. OB. No O C. Not enough information to answer Data table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Expansion A Expansion B Amount Amount $10,000 $10,000 Initial investment Annual rate of return Pessimistic Most likely Optimistic 16% 22% 24% 13% 22% 27% Print Done