Question 31 (2.94 points) Gilead Sciences, Inc., a U.S. firm, plans to invest a new project in either the United States or U.K. Once completed, it will continue 65% of the firm's total funds invested in itself. The remaining 35% of its investment in its business is exclusively in the U.S. Characteristics of the proposed project are forecasted for a 3-year period for both a U.S. and a British location as follows: CHARACTERISTICS OF PROPOSED PROJECT IF LOCATED IN IF LOCATED IN Existing THE UNITED THE UNITED Business STATES KINGDOM Mean expected annual return on investment 20% 25% 25% (after taxes) Standard deviation of expected annual after-0.16 0.19 0.25 tax returns on investment Correlation of expected annual after-tax 0.50 -0.70 returns on investment with after-tax returns of prevailing U.S. business What will be your suggestion for Gilead Sciences, Inc. for the project location? of prevailing U.S. business What will be your suggestion for Gilead Sciences, Inc. for the project location? Since the expected return will be the same, it shall locate in the U.S. because the standard deviation is 17.95%, smaller than that located in the U.K., which is 21.85% Since the expected return will be the same, it shall locate in the U.K. because the standard deviation is 12.96%, smaller than that located in the U.S., which is 15.91%. Since the expected return will be the same, it shall locate in the U.S. because the standard deviation is 1.68%, smaller than that located in the U.K., which is 2.53% Since the expected return will be the same, it shall locate in the U.S. because the standard deviation is 18.64%, smaller than that located in the U.K., which is 20.58%