1. Consider the followinglist of projects(data in millions):

Alternative	Investment	PW(15%)	PW	Payback
1	$100	$573	$1642	12
2	$303	$283	$132	7
3	$317	$647	$660	5
4	$235	$665	$941	4

Assume that projects2 and 3 are mutually exclusive and that thereis a $600 million budget.

Find the mean and varianceof the present worth for all feasibleportfolios. Construct an efficiency frontier.

1. What does it tell you?
2. Use threshold analysis with a minimum present-worth standard of $0 and maximum standard deviation of $2
3. billion, and a maximumpayback of 10 (assume that the paybackperiod for a portfolio is the maximum
4. payback period of any project in the portfolio). What projects shouldbe considered?
5. Assume that the criteriaof present worth,standard deviation, and payback periodare ordered as listed, with
6. ideal values of $2 billion, $125 million respectively. Provide a score for each portfolio and select the best one.

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