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:

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?

What kinds of real investment projects have cash flows similar to those in the exhibit?

	Project1	Project2	Project3	Project4	Project5	Project6	Project7	Project8
Initial Investment	$ 2,000.00	$ 2,000.00	$ 2,000.00	$ 2,000.00	$ 2,000.00	$ 2,000.00	$ 2,000.00	$ 2,000.00
Year
1	$ 330.00	$ 1,666.00		$ 160.00	$ 280.00	$ 2,200.00	$ 1,200.00	$ (350.00)
2	$ 330.00	$ 334.00		$ 200.00	$ 280.00		$ 900.00	$ (60.00)
3	$ 330.00	$ 165.00		$ 350.00	$ 280.00		$ 300.00	$ 60.00
4	$ 330.00			$ 395.00	$ 280.00		$ 90.00	$ 350.00
5	$ 330.00			$ 432.00	$ 280.00		$ 70.00	$ 700.00
6	$ 330.00			$ 440.00	$ 280.00	$ 4,000.00		$ 1,200.00
7	$ 330.00			$ 442.00	$ 280.00			$ 2,250.00
8	$ 1,000.00			$ 444.00	$ 280.00
9				$ 446.00	$ 280.00		$ 2,000.00
10		$ 5,000.00		$ 448.00	$ 280.00
11				$ 450.00	$ 280.00
12				$ 451.00	$ 280.00
13				$ 451.00	$ 280.00
14				$ 452.00	$ 280.00
15			$ 9,000.00	$ (2,000.00)	$ 280.00
Sum of cash flow
benefits	$ 3,310.00	$ 7,165.00	$ 9,000.00	$ 3,561.00	$ 4,200.00	$ 6,200.00	$ 4,560.00	$ 4,150.00
Excess of cash flow
Over investment	$ 1,310.00	$ 5,165.00	$ 7,000.00	$ 1,562.00	$ 2,200.00	$ 4,200.00	$ 2,560.00	$ 2,150.00

The company has the following capital structure:

Account	$	Costs before tax
Long-term Debt	1,500,000	10%
Preferred Stock	500,000	12%
Common Stock	3,000,000	20%

Calculate the weighted average cost of capital (tax is 40%)

Using the same cash flows in exhibit I find the NPV, PI, IRR and MIRR (Use your answer on part one as cost of capital). Which project(s) would you recommend and why?