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NEW QUESTION: 1
A company is deciding whether to invest in project A or project B. A decision tree has been prepared to illustrate the investment decision and its associated possible net present values (NPVs).

Which of the following statements is correct?
A. Project A will generate a positive net present value of $1.3m.
B. decision maker who is risk seeking would select project A.
C. A risk neutral decision maker would select project B because it shows less variation of outcomes.
D. Project A is more likely to reduce shareholder wealth than to increase it.
Answer: B

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