Question: A corporation is choosing between two projects. The project chosen will be the only investment for the firm. Project A has an NPV of $530,000.

A corporation is choosing between two projects. The project chosen will be the only investment for the firm. Project A has an NPV of $530,000. Project B has a 40% chance of generating a net cash flow of $2,000,000 and a 60% chance of losing $100,000. The firm has $1,000,000 of equity and $1,000,000 of debt, with a 10% coupon. Which project would shareholders prefer? Responses Project B, since the expected

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