3 / 6 80% 10. Risk and probability Micro Pub, Inc., is considering the purchase of one of two microfilm cameras, R and S. Both should provide benefits over a 10 year period, and each requires an initial investment of $5,000. Management has constructed the following table of estimates of rates of retum and probabilities for pessimistic, most likely, and optimistic results. 1 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? a. The range for the rate of return for camera Ris %. (Round to the nearest whole number.) The range for the rate of return for camera Sis %. (Round to the nearest whole number) b. The value of the expected retum for camera Ris %. (Round to two decimal places.) The value of the expected return for camera Sis % (Round to two decimal places.) C. Which camera purchase is riskier? Why? (Select from the drop-down menus.) The purchase of (1) is riskier because it has a (2) range for the rate of return 1: 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.) Camera R Amount Probability $5,000 1.00 Cameras Amount Probability $5,000 1.00 Initial investment Annual rate of retum Pessimistic Most likely Optimistic 1696 25% 0.23 0.39 0.38 2496 29% 30% 0.24 0.54 0.22 32% (1) cameras camera R (2) smaller larger