6. (20 points) Consider the following list of projects (data in millions): Investment PW(15%) Alternative 1...

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6. (20 points) Consider the following list of projects (data in millions): Investment PW(15%) Alternative 1 $100 2 $303 3 $317 $235 $573 $283 $647 $665 $1642 $132 $660 $941 Payback 12 7 5 4 Assume that projects 2 and 3 are mutually exclusive and that there is a $600 million budget. (a) Find the mean and variance of the present worth for all feasible portfolios. Construct an efficiency frontier. What does it tell you? (b) Use threshold analysis with a minimum present-worth standard of $0 and maximum standard deviation of $2 billion, and a maximum payback of 10 (assume that the payback period for a portfolio is the maximum payback period of any project in the portfolio). What projects should be considered? (e) Assume that the criteria of present worth, standard deviation, and payback period are ordered as listed, with ideal values of $2 billion, $125 million respectively. Provide a score for each portfolio and select the best one. 6. (20 points) Consider the following list of projects (data in millions): Investment PW(15%) Alternative 1 $100 2 $303 3 $317 $235 $573 $283 $647 $665 $1642 $132 $660 $941 Payback 12 7 5 4 Assume that projects 2 and 3 are mutually exclusive and that there is a $600 million budget. (a) Find the mean and variance of the present worth for all feasible portfolios. Construct an efficiency frontier. What does it tell you? (b) Use threshold analysis with a minimum present-worth standard of $0 and maximum standard deviation of $2 billion, and a maximum payback of 10 (assume that the payback period for a portfolio is the maximum payback period of any project in the portfolio). What projects should be considered? (e) Assume that the criteria of present worth, standard deviation, and payback period are ordered as listed, with ideal values of $2 billion, $125 million respectively. Provide a score for each portfolio and select the best one.

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Portfolio Analysis for Arkansas Tech Endowment Continued 6 Project Analysis a Mean and Variance Efficiency Frontier Calculate individual project stati... View the full answer