a) Estimate the Expected NPV and standard deviation for the proposed investment.

b) Briefly comment on the use of mean-variance analysis in the context of project finance.

Clear Products Plc (CP) is considering introducing a new tablet computer to its range Products in this market have a short lifespan, it is expected that two years after launch the product would be obsolete and sales would fall to zero. The initial net investment required (including working capital investment) would be 2,600,000, which would be incurred immediately if the project proceeds. 650,000 of the working capital investment will be recovered at the end of the two year period. CP's WACC is estimated at 9%. If there is high customer demand in the first year, net cash flows of 1,340,000 are expected, if demand is low, net cash flows of 900,000 are expected. These outcomes are considered equally likely If there is high demand in the first year, three outcomes are possible in the second year: high demand (net cash flows of 2,100,000 - probability of 0.25), moderate demand (net cash flows of 1,650,000 probability of 0.5) or low demand (net cash flows of 400,000 probability of 0.25). If there is low demand in the first vear, three outcomes are possible in the second year: high demand (net cash flows of 1,100,000 - probability of 0.25), moderate demand (net cash flows of 850,000 -probability of 0.5) or low demand (net cash flows of 250,000 probability of 0.25). Note: All cash-flows are after-tax. Clear Products Plc (CP) is considering introducing a new tablet computer to its range Products in this market have a short lifespan, it is expected that two years after launch the product would be obsolete and sales would fall to zero. The initial net investment required (including working capital investment) would be 2,600,000, which would be incurred immediately if the project proceeds. 650,000 of the working capital investment will be recovered at the end of the two year period. CP's WACC is estimated at 9%. If there is high customer demand in the first year, net cash flows of 1,340,000 are expected, if demand is low, net cash flows of 900,000 are expected. These outcomes are considered equally likely If there is high demand in the first year, three outcomes are possible in the second year: high demand (net cash flows of 2,100,000 - probability of 0.25), moderate demand (net cash flows of 1,650,000 probability of 0.5) or low demand (net cash flows of 400,000 probability of 0.25). If there is low demand in the first vear, three outcomes are possible in the second year: high demand (net cash flows of 1,100,000 - probability of 0.25), moderate demand (net cash flows of 850,000 -probability of 0.5) or low demand (net cash flows of 250,000 probability of 0.25). Note: All cash-flows are after-tax