The CEO of Stuffitt, the AirBnB for storage units, is pleased with projections that the company can earn $5 million in profit per year, once it is up and running, two years from now. However, she is concerned about a risk analysis that found Stuffitt only has a 60% chance of getting through each of the next years. Part of the risk is legal, and Stuffitt could invest in a top-notch company lawyer to reduce that risk, which would increase the annual chance of survival to 75%. Alternatively, the money could be spent on an aggressive marketing campaign that is expected to raise annual profits to $10 million. Which is the better investment in terms of maximizing the value of the firm? Neither would change the firms value, so the effect is the same. Reducing the risk: this more than doubles the firms value, whereas increasing profit exactly doubles it. Increasing the profit: this increases the firms value by 50%, whereas reducing the risk only increases the firms value by 15%. Both would increase the firms value by 25%, so the effect is the same