QUESTION 2 (25 MARKS) Consider two mutually exclusive projects - Project X and Project Y with identical initial outlays of RM90,000 and depreciable lives of 5 years. Project X is expected to produce free cash flows of RM32,787 each year. Project Y is expected to generate a single after-tax net cash flow of RM223,880 in year 5. The cost of capital is 15 percent. Required: (a) Calculate the net present value for each project. (6 marks) (b) Determine the internal rate of return for each project. (6 marks) (c) Compute the payback period for each project. (4 marks) (d) In a situation where there is capital rationing, calculate the profitability index (Pl) for both projects and rank them accordingly. Based on your Pl calculations above, identify the problems you foresee in selecting one of the projects. Select the best project based on Capital Budgeting Valuation Techniques above. (9 marks) QUESTION 3 (25 MARKS) The following shows the expected percentage returns on three stocks over the next six years: Stock Year B 1 10 8 5 2 5 4 10 Percentage Return (%) 3 4 6 8 4.80 6.4 12 10 5 12 9.6 6 6 15 12 6 Required: (0) Find the expected return for each of the stock. (6 marks) C) Compute the variance and standard deviation for stock A, B and C. Show your working. (15 marks) (ii) Justify how can you minimize the risk of the above combination of stocks. (4 marks)