EXAMINATION PAPER-2019 FIRST SEMESTER FINANCIAL MANAGEMENT I Question 3 [32] The management of Ace Properties (Pty) Ltd is considering investing in the building an a medium-sized shopping mall. They have identified a suitable site in Sebokengevant alternative site in Soweto. Management has requested you to calculate the relevant expected returns and risks for each of these projects. After conducting a full scenario analysis, the following information about the two projects were agreed: 9 The initial investment will be R25 000 000. The required return on the investment is 11%. Ace Properties' management is risk averse in their decision-making. Estimated returns based on probable economic conditions: Probability Sebokeng Soweto Pessimistic 20.00% 8.50% 7.00% Most likely 50.00% 12.00% 12.00% Optimistic 30.00% 15.00% 16.00% Required Show all calculations and perform all calculations to two decimal values. Use the information provided to: 3.1. 3.2. 3.3. 3.4. Calculate the expected return and standard deviation for project Sebokeng. Calculate the expected return and standard deviation for project Soweto. Calculate the risk range for the projects. (4) Use the results of the above calculations and your knowledge of return and risk to compare the two projects and to recommend to Ace's management the project they should consider. Provide reasons for your recommendation. (10)