Answer Question 2.1, 2.2 and 2.3 based on the information given

On-The-Radar Ltd. ("OTR") is a renowned high-technological ("high-tech") entity established in April 1991. The entity has a financial yearend of 30 June. OTR is involved in developing and manufacturing equipment which utilises radars to operate. Product lines that OTR has on offer include: - Radars utilised in and for certain aircrafts - Radars utilised in defence machinery and vehicles - Radars utilised in medical equipment The directors of OTR are currently interested in entering the sports industry by developing radar equipment specifically for it. As the entity will enter the sports industry for the first time, the directors deem it wise to focus the entity's financial and operational resources on a limited number of sports radar product lines first in order to achieve the highest possibility of these product lines succeeding. OTR has made available finances of R13.7 million to utilise in the sports radar equipment product lines. Two sports radar product lines have been identified which promise to the highest chance of success. Cricket radar equipment OTR could proceed to develop radar equipment which will be able to measure the speed and angle at which the cricket ball was bowled and other movement activities thereof. A sensitivity analysis and market research have been conducted which delivered the following results: Should the cricket radar product line fail, a loss of 15.2% will be experienced. The chance of this product line failing is 6.6%. However, should it be successful a 67.3% return will be obtained and, if highly successful, an 81.7% return. The chances of these are 58% and 21.2% respectively. In the case of the cricket radar equipment achieving average success, a 54.3% return will still be obtained. Golf radar equipment Golf radar equipment is another product line for consideration. These equipment items will be able to determine the speed of the golf ball, whether the golfer "pulled" or "pushed" the ball as well as other relevant information. The sensitivity analysis and market research for this product line, indicated the following: Should the product be successful, a 63.7% return will be received. The chance of this is 38.8%. If the product line is only average in this success a 57% return will be generated of which the chance is 40.4%. In the extreme cases of a failure or a high success, the outcomes will be returns of 3% and 75.2% respectively. A 9% probability can be assigned to the first and 11.8% to the latter. OTR will in particular aim to sell these products to professional sports intuitions to be utilised in major sporting events. The products will however also be available to the private consumer market. REQUIRED: 2.1. Calculate the return that On-The-Radar Ltd. could expect from the cricket product line. (4 marks) 2.2. Calculate the risk that On-The-Radar Ltd. can expect from the cricket product line. (13 marks) 2.3. The directors of On-The-Radar Ltd. pointed out that the research indicated that the cricket product line will experience a loss of 15.2% should it fail whereas the golf product line will at least still generate a return of 3% if the same unfavourable outcome prevails. Advise the directors of On-The-Radar Ltd. as to what the chances are of the cricket product line generating a return of at least 3%. (6 marks)