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Now I think that the way to work out standard deviation in Q1 was to work out average return (xx) by multiplying probability with expected returns (x) and add them up . Then we should deduct average return from expected returns (x-xx). Then to work out variance =sum of p(x-xx)^2 Std deviation is square root of variance.
This is almost impossible to remember under the exam stress…So many topics which required long detailed calculations were covered in Question 1. The examiner made it as difficult as only possible. Apart from calculations which we are expected to be able to perform under the syllabus, we had to find out some numbers for this calculations in the mess of unclear info, make guesses what the examiner really wanted from us under the examination time constraint. In question one it was unclear whether to discount the project at cost of equity or to use WACC. At first I discounted cahflows at ke, but then I changed my mind and calculated WACC. I stopped several times during question one and thought that I might had been doing something wrong… Question killed my brain and motivation to go on. I started question 2 and did not even attempted any other question.