Problem 6: [15 points] A corporation is considering 7 projects. All seven require the same investment, but have different cash-flow patterns. The cash-flows are shown below. The corporation applies a 10% discount rate. Project 6 and 7 are mutually exclusive. (a) Rank the projects by Payback Period, Discounted Payback Period, NPV, Profitability Index and IRR. Project cash-flows are in thousands of dollars. [10 points] (b) At what discount rate will Project 6 and Project 7 have the same NPV? [5 points) 165 70 700 Project Number 1 2 3 4 5 6 7 Initial Investment -2,000 -2,000 -2,000 -2,000 -2,000 -2,000 -2,000 Time 330 1666 280 2200 1200 -350 2 330 334 280 900 -60 330 280 300 60 - 4 330 280 90 350 330 280 330 280 1200 280 2250 8 1000 280 280 280 11 280 12 280 13 280 280 15 10000 10000 280 330 10 14 Problem 6: [15 points] A corporation is considering 7 projects. All seven require the same investment, but have different cash-flow patterns. The cash-flows are shown below. The corporation applies a 10% discount rate. Project 6 and 7 are mutually exclusive. (a) Rank the projects by Payback Period, Discounted Payback Period, NPV, Profitability Index and IRR. Project cash-flows are in thousands of dollars. [10 points] (b) At what discount rate will Project 6 and Project 7 have the same NPV? [5 points) 165 70 700 Project Number 1 2 3 4 5 6 7 Initial Investment -2,000 -2,000 -2,000 -2,000 -2,000 -2,000 -2,000 Time 330 1666 280 2200 1200 -350 2 330 334 280 900 -60 330 280 300 60 - 4 330 280 90 350 330 280 330 280 1200 280 2250 8 1000 280 280 280 11 280 12 280 13 280 280 15 10000 10000 280 330 10 14