$1.$ Two projects being considered are mutually exclusive and have the following cash flows:

Year Project A Project B

$0$$$50,000$$$50,000$

$115,6250$

$215,6250$

$315,6250$

$415,6250$

$515,62599,500$

If the required rate of return on these projects is $10$ percent, which would be chosen and why?

$2.$ Given the following information, compute the standard deviation for Investment A:

Investment A

Payoff Probability

$20\%0\mathrm{.}5$

$10\%0\mathrm{.}4$

$10\%0\mathrm{.}1$

$=13\mathrm{.}0\%$

$3.$ Consider the following information, and then calculate the required rate of return for the Scientific Investment Fund. The total investment in the fund is $$2$ million. The market required rate of return is $15$ percent, and the risk$-$free rate is $7$ percent.

Stock Investment Beta

A $ $200,0001\mathrm{.}50$

B $300,0000\mathrm{.}50$

C $500,0001\mathrm{.}25$

D

a$.14\mathrm{.}3\%1,000,0000\mathrm{.}75$

$4.$ Calculate the Payback Period for an investment Project with the following data:

Initial Investment: $$450$

Cash flow for year #$1$: $$325$

Cash flow for year #$2$: $$65$

Cash flow for year #$3$: $$100$