For the first part of this assignment, only quantitative considerations are relevant. No other project characteristics are deciding factors in the selection, except that management has determined that projects 7 and 8 are mutually exclusive.

All projects require the same initial investment, $2,000,000. Moreover, all are believed to be of the same risk class. The weighted average cost of capital for the first part is 10%. To simulate your analysis, consider the following questions:

3. What is the ranking you found by using quantitative methods (please show all your calculations)? (20%) Does this ranking differ from the ranking obtained by a simple inspection of the cash flows? (5%)

EXHIBIT I Project cash flows in (000) Yellows/italics indicate year in which payback is accomplished