QUESTION 2 The management of New Age Computing is considering developing a new type of mobile gaming device. The project requires an initial investment of R25 million. There is a 60% chance that the project will have a positive cash flow of R20 million in year 1. If the cash flow is achieve in year 1 and then there is a 60% chance that the project will have a cash inflow of R30 million in year 2 or a 40% chance that the cash inflow will be R15 million in year 2. If the project is not successful there is a 40% chance that the project will have a negative cash flow of R10 million in year 1. In the case of year 1, there is a 50% chance that the project would have a positive cash flow of R15 million in year 2 or a 50% chance that the project will have a negative cash flow of R10 million in year 2 REQUIRED: 2.1 Draw a decision tree for the above project with four pathways, namely A, B, C & D (10 marks) 2.2 Calculate the project's probable NPV assuming a cost of capital of 12% (24 marks) 2.3 Based on your answer above, advise the management of New Age Computing whether they should accept or reject this project (3 marks) 2.4 Calculate the standard deviation and co-efficient of variance for the first year of the project. Comment on your final answer (8 marks) 2.5 Discuss whether you think the cost of capital is sufficiently capturing the risks in the first year of the project or should it be adjusted. Motivate your answer (4 marks) 2.6 Explain to the Management of New Age Computing which pathway should be continued, expanded, or terminated in year 1. Motivate your answers. (4 marks) (53 Marks