Securities	Expected Return	Variance
X	15%	16%
Y	30%	25%

The correlation coefficient is 0.4

1. Calculate the expected return and standard deviation of return for an equally weighted portfolio. [10 marks]
2. For an investment project that is currently being evaluated, the following estimates have been made of most likely, best and worst outcomes for the total cash outflows and the total cash inflows (all discounted to todays date to give present values), together with their probabilities:

Total cash outflows( m)	5.0	6.0	8.0
Probability	0.3	0.4	0.3
Total cash inflows( m)	4.0	8.0	14.0
Probability	0.2	0.6	0.2

Calculate the expected net present value of the project [10 marks]

1. Analyse the basic principles of Capital Bugeting.[10 marks]
2. To what extent can a firm reduce its working capital cycle?[10 marks]