1(al_Company EEF Itd is considering an investment of 100,000. The desired payback period is 3 years. The board of directors have identified two altematives; project A and project B. The expected annual cash flows are as follows: Cash flow: Project A Project B - 100,000.00 100,000.00 35,000.00 35,000.00 28,000.00 35,000.00 32,000.00 35,000.00 40,000.00 35,000.00 Required: Calculate the Payback period of each project and advise EEF's board of directors which project they should invest in (7 marks) b) Mrs Daisy is considering two securities, A and B, and the relevant information is given below: Return on Security A(%) Return on Security B (%) State of Economy Bear | Bull Probability 0.6 0.4 3.00% 6.50% 15.00% 6.50% 1. Calculate the expected retums and standard deviations of security A and security B. (5 marks) 2. Explain how diversification can reduce the unsystematic risk of a given portfolio