1a) Green Mountain River, Inc. (GMR) has no long-term debt in its capital structure and is considering a project that will produce the following net cash flows: Year 0) - $1.1 million; Year 1) $610,00; Year 2) $450,000; Year 3) $200,000; Year 4) $100,000. If the current risk-free rate is 4.5% and the current market-risk premium is 7.2% and GMRs beta is 1.6, should they accept the project? Why or why not?

1b) A portfolio has 15% of its value in IBM shares and the rest in Microsoft (MSFT). The standard deviation of IBM and MSFT are 35% and 30%, respectively, and the correlation between IBM and MSFT is 0.6. What is the standard deviation of the portfolio?