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Provide the estimated potential returns that may be achieved from a project, together with the likelihood of such returns occurring, detailed in the table below:

Provide the estimated potential returns that may be achieved from a project, together with the likelihood of such returns occurring, detailed in the table below:

Possible Returns Probability of Occurrence
-11% 10%
2% 20%
4% 45%
10% 25%

The project has an estimated risk, measured with Beta, of 0.85 which has been externally verified. The market portfolio, measured as the ASX 200, has returned an average of 4.5% per annum over the past 5 years. The current risk-free rate is 1%.

Calculate the standard deviation of this project and comment on this return relative to the markets standard deviation of 7.5% p.a. Additionally, given the above information, identify whether it is a good idea to invest in this company. Explain your reasoning for your decision.

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