3.Explain what capital budgeting is and why it is used.

4.Explain the benefits of Profitability Index instead of NPV method

5. Explain why payback period is a limited method.

6. Given the following returns on an investment: 12%, 14%, 10%, 9%, 8% and 6%

a.Calculate the variance

b. Calculate the standard deviation

7. Given the following returns on an investment: 10%, 24%, 10%, 6%, 18% and 6%

a.Calculate the variance

b. Calculate the standard deviation

8. Which investment has greater risk - that in question 6 or question 7?