1. What is the approximate variance of returns if over the past 3 years an investment returned 8.0%, -12.0%, and 15.0%?
A. 31
B. 131
C. 182
D. 961
2. What is the approximate standard deviation of returns if over the past 4 years an investment returned 8.0%, -12.0%, -12.0%, and 15.0%?
A. 9.26%
B. 10.26%
C. 11.26%
D. 12.01%
3. A proposed capital project will cost $20 million and generate $4 million annually in after-tax cash flows for 10 years. The cost of capital for a project of this risk level is 12.2%. Should the project be accepted? Why or why not?