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EXHIBIT 1 | Projects' Free Cash Flows (dollars in thousands) Project number: 1 2 3 4 5 Initial Investment $(2,000) $(2,000) S(2,000) $(2,000) $(2,000) 8 $(2,000) $1,666 334" 165 6 7 $(2,000) $(2,000) $ 2,200 $1,200 900* 300 90 $ (350) (60) 60 350 700 1.200 $2,250 70 Year 1 $ 330 2 330 3 330 330 5 330 330 7 330* 8 $1,000 9 10 11 12 13 14 15 Sum of cash flow benefits $3,310 Excess of cash flow over initial investment $1,310 $ 160 $ 280 200 280 350 280 395 280 432 280 440" 280 442 280 444 280" 446 280 448 280 450 280 451 280 451 280 452 280 $(2.000) $ 280 $10,000" $2,165 $10,000 $ 3,561 $4.200 $ 2,200 $2,560 $ 4,150 $ 165 $ 8,000 $ 1,561 $2.200 $ 200 $ 560 $ 2,150 I T indicates year in which paytsack was accomplished. To stimulate your analysis, consider the following questions: 1. Can you rank the projects simply by inspecting the cash flows? 2. What criteria might you use to rank the projects? Which quantitative ranking methods are better? Why? 3. What is the ranking you found by using quantitative methods? Does this ranking differ from the ranking obtained by simple inspection of the cash flows? 4. What kinds of real investment projects have cash flows similar to those in Exhibit 1? EXHIBIT 1 | Projects' Free Cash Flows (dollars in thousands) Project number: 1 2 3 4 5 Initial Investment $(2,000) $(2,000) S(2,000) $(2,000) $(2,000) 8 $(2,000) $1,666 334" 165 6 7 $(2,000) $(2,000) $ 2,200 $1,200 900* 300 90 $ (350) (60) 60 350 700 1.200 $2,250 70 Year 1 $ 330 2 330 3 330 330 5 330 330 7 330* 8 $1,000 9 10 11 12 13 14 15 Sum of cash flow benefits $3,310 Excess of cash flow over initial investment $1,310 $ 160 $ 280 200 280 350 280 395 280 432 280 440" 280 442 280 444 280" 446 280 448 280 450 280 451 280 451 280 452 280 $(2.000) $ 280 $10,000" $2,165 $10,000 $ 3,561 $4.200 $ 2,200 $2,560 $ 4,150 $ 165 $ 8,000 $ 1,561 $2.200 $ 200 $ 560 $ 2,150 I T indicates year in which paytsack was accomplished. To stimulate your analysis, consider the following questions: 1. Can you rank the projects simply by inspecting the cash flows? 2. What criteria might you use to rank the projects? Which quantitative ranking methods are better? Why? 3. What is the ranking you found by using quantitative methods? Does this ranking differ from the ranking obtained by simple inspection of the cash flows? 4. What kinds of real investment projects have cash flows similar to those in Exhibit 1