Your uncle has N$400 000 in savings. He is considering either investing all of it in a farming project or to invest it in a carpentry business, brick molding business, and taxi operating business. Your uncle wants you to help him make some estimates on the prospects of his business. From the weather forecasters, you have gathered that the weather may be 20% bad, 25%moderately good, or 30% very good. Agribank economists are predicting that, given these probabilities of weather, farmers returns are projected to average 7%, 12% and 17% respectively. Your uncles plan B is to spread the N$400,000 in a portfolio of investments N$160,000 going into farming, N$50,000 into a carpentry business, N$100,000 into a brick molding venture, and the remaining money going into a taxi transport business. Specifically, your uncle wants to know the likely returns from the investment alternatives and has approached you for advice.( use the percentages of weather in correlation with returns averaging percentages)

Required:

a. Advise the retiree on what his likely return is in N$ terms and as a % if he invests all his N$400,000 into farming. (8 marks)

b. Determine the risk associated with the farming project if the he invests all his money in farming. (10 marks)

c. Calculate your uncles likely return if he invests in the portfolio. (10 marks)

d. Determine the risk of investing in the portfolio. (12 marks)