Question 2 [30] Alt En Ltd is an electricity provider that generates electricity using different technologies and then supplies electricity to the national electricity grid. The company is considering whether to invest in one of two competing technologies to generate more electricity. The one project generates electricity using wind power (WP), while the second project uses solar power (SP). Both projects require an initial investment of R12000 000. Alten, however, has capital available to invest in only one of the two projects. Alten's executive management (EXCO) has decided to evaluate the expected returns and risks from these opportunities and the returns and risks from existing operations (EO) based on an analysis of three possible economic conditions. The economic conditions are pessimistic, normal and optimistic. From their analysis they have prepared the following estimated returns and risks for the projects and existing operations and the probabilities for the different economic scenarios: Expected returns from WP, SP and EO Probability (P) 35% Economy Optimistic Normal Pessimistic WP (Rap) 25.0% 25.0% (5.0%) Rwe px Rwe 8.8% 10.0% (1.3%) 45% 25% 17.5% P* RsP Probability (P) 35% Economy Optimistic Normal Pessimistic SP (R) (2.0%) 17.0% (0.7%) 6.8% 40% 25% 30.0% 7.5% RP 13.6% EO (Red) Px Reo Economy Optimistic Normal Probability (P) 35% (3.5%) 40% 8.0% (10.0%) 20.0% 30.0% REC = Pessimistic 25% 7.5% 12.0% EXCO also believes that the risks and returns per R1.00 of existing operations' current market value are similar to those of the stock market. The current rate of return of short-term government bonds is 8% per year. Required: For both projects WP and SP, calculate: 2.1. Their covariance with existing operations (14) 2.2. Their beta values (6) 2.3. Their required returns using the capital asset pricing model (CAPM)