1 Random Gears is a U.S. company consider a new project that may be located in the United States, the United Kingdom, Australia or Canada. The following represents the characteristics of the four different proposed projects: (This problem worth 15 pts.) Existing Characteristics of Proposed Project Business If in the U.S. If in the If in If in Canada UK Australia Mean of 20% 20% 25% 30% 15% Expected return on investment (after tax) Standard . 10 .09 .11 13 .08 deviation of expected annual after-tax return on investment Correlation of 1.00 8 .02 -.05 .3 expected annual after-tax returns on investment with after-tax returns of prevailing US business Percentage 1-% dedicated 30% 50% weight of total 40% to project 45% portfolio (remainder assigned to existing business) 8 Based on the different project combinations find the various weighted average returns and variance of portfolio measurements by completing the following table: Combination Weighted Average Return Variance of Portfolio Measurement Existing with U.S. Existing with UK Existing with Australia Existing with Canada Use the following area to insert a plot of the various combination points. Place Expected Return on the vertical axis and Risk on the horizontal axis. Based on your calculations and plot, which portfolio seems to be dosest to the frontier of efficient project portfolios