Refer to the attachment.

Explain the concept of "rate of interest" in the context of financial decisions. (5 marks) The Mentala Plastics Company has been dumping in the local council waste collection centre some 301000 Kg. of unusable chemicals each year. In addition to being an eyesore, the residents of a nearby estate have started complaining of bad odour emanating from the dump and suspect that the company is to blame. The company has received information that these chemicals can be recycled at relatively little cost. The equipment to do it is however rather expensive and, in addition, the chemicals recovered are of a relatively poor quality. Investigations have shown that these chemicals can be sold to another firm at an average price of Sh.35 per Kg. The direct cost of recycling has been cakultated at Sh.15 per Kg. but this is before depreciation and taxes,The equipment for this process has an expected life of 10 years and a current cost of Sh.2 million At the and of the ten years, it will be virtually worthless. For financial analysis, the company uses the straight line method of depreciation and an average tax rate of 40%. It has a required rate of return of 15%. REQUIRED: Compute the project's net present value (N.P.V). Compute the payback period and the accounting rate of return. Compute the internal rate of return (IRR). W. Should this project be undertaken? Explain. Are there any other important maners that the company should consider in evaluating this project?Four assets have the following distribution of returns. Probability Rate of return Occurrence A B C D 100% 6,0% 14.0% 20% 1010 8.0 12.0 6.0 10.0 10.0 10-0 9.0 10.0 12.0 8.0 15.0 1010 14.0 6.0 20.0 REQUIRED: Compute the expected return and standard deviation of each asset. b. Compute the covariance of asset A and B B and C Band D Compute the correlation coefficient of the combination of assets in b above