Q4 (a). Following are two mutually exclusive projects. The company is in dilemma which project to choose. You have been approached by the company to tell which project should be chosen by the company. You think Profitability Index is best method of ranking projects. Please suggest which project should be chosen by the company? Year Flows 0 1 2 3 4 5 Project A (25,000) 10,000 15,000 17,000 10,000 Project B (35,000) 12,000 17,000 25,000 15,000 5,000 The capitalization rate is 12% p.a. (15 Marks) (b) You invested 60,000 in asset I that produced 20% returns and 40,000 in asset 2 that produced 12% returns. The weights of the two assets are 60% and 40% respectively. Standard deviation of the two assets are 10 and 16, and the correlation between the two assets is -0.75. Calculate: 1) Portfolio return 2) Portfolio Risk (5 Marks) (10 Marks)