1. Rank the projects from 1 to 8, how sensitive is your ranking to the use of high discount rates? Why do NPV and IRR disagree, refer to the NPV values at the 10% discount rate?

Exhibit 1 The Investment Detective Project Free Cash Flows (in $ Thousands) Project Number 1 2 3 4 5 6 7 8 $2,000) $2,000) $1,666 334 165 ($2,000) $2,200 Initial Investment Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 $2,000) $330 330 330 330 330 330 330 1,000 ($2,000) $1,200 900 300 90 70 $2,000) $160 200 350 395 432 440 442 444 446 448 450 451 451 452 (2,000) ($2,000) 280 280 280 280 280 280 280 280 280 280 280 280 280 280 280 $2,000) ($350) (60) 60 350 700 1,200 2,250 10,000 $3,310 $2,165 $10,000 $3,561 $4,200 $2,200 $2,560 $4,150 Sum of Cash Flow Benefits Excess of Cash Flo Over Initial Investment $1,310 $165 $8,000 $1,561 $2,200 $200 $560 $2,150 Analysis $20 6.06 Payback NPV 10% $73.09 11% ($11.05) 12% $90.08) 13% ($164.38) 14% $234.30) 15% ($300.16) 16% ($362.25) 10.87% 1.037 IRR PV Index