Risk and probability Micro-Pub, Inc., is considering the purchase of one of two digital cameras, R and S, each of which requires an initial investment of $3,000. Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results: a. Determine the range for the rate of return for each of the two cameras. b. Determine the value of the expected return for each camera. c. Which camera purchase is riskier? Why? C - X Data table %. (Round to the nearest whole number.) (Round to the nearest whole number.) a. The range for the rate of return for camera R is The range for the rate of return for camera S is%. b. The value of the expected return for camera R is The value of the expected return for camera S is%. (Round to two decimal places.) c. Which camera purchase is riskier? Why? (Select from the drop-down menus.) %. (Round to two decimal places.) (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Camera R Amount Probability $3,000 1.00 Camera S Amount Probability $3,000 1.00 The purchase of is riskier because it has a range for the rate of return. Initial investment Annual rate of return Pessimistic Most likely Optimistic 20% 0.24 17% 0.21 26% 0.54 27% 0.57 35% 0.22 33% 0.22 Print Done