1. A portfolio consists 40% of a risk-free asset and 60% of a stock. The risk-free return is 6%. The stock has an expected return of 20% and a standard deviation of 30%. What’s the expected return on the portfolio?

2. You’re trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $18.2 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,795,000, $2,135,000, $2,014,000, and $1,316,000 over these four years, what is the project’s average accounting return (AAR)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)