Background: You are the finance manager having to compare 2 projects: 7 and 8 and select one to recommend to the Board of Directors. The discount rate is 10%.
Task 1: Compute NPV, PI, and IRR of Project 7 and 8. [Word limit: 20 words] Type your answer below:	Max: 20 Marks
Task 2: List 2 reasons why 7 is better than 8. [Word limit: 20 words] Type your answer below:	Max: 20 Marks
Task 3: List 2 reasons why 8 is better than 7. [Word limit: 20 words] Type your answer below:	Max: 20 Marks
Task 4: Consider qualitative factors: What kind of business (e.g., manufacturing, trading, etc) will have cashflow pattern of Projects 7 and 8 respectively? Which project would you pick after taking these qualitative factors into account? [Word Limit: 50 words] Type your answer below:	Max: 40 Marks

Note: You may attach appendices, tables, etc with different documents and send with your Marking Scheme.

EXHIBIT 1 | Projects' Free Cash Flows (dollars in thousands) Project number: Initial investment 1 $(2,000) 2 3 $(2,000) $(2,000) 4 5 $(2,000) $(2,000) 6 7 $(2,000) $(2,000) 8 $(2,000) Year $ 2,200* $1,666 334* 165 1 2 3 4 5 6 7 8 9 10 $ 330 330 330 330 330 330 330* $1,000 $1,200 900* 300 90 70 $ (350) (60) 60 350 700 1,200 $ 2,250* $ 160 200 350 395 432 440* 442 444 446 448 450 451 451 452 $10,000* $(2,000) $ 280 280 280 280 280 280 280 280* 280 280 280 280 280 280 $ 280 12 13 14 15 Sum of cash flow benefits $3,310 Excess of cash flow over initial investment $1,310 $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 *Indicates year in which payback was accomplished. EXHIBIT 1 | Projects' Free Cash Flows (dollars in thousands) Project number: Initial investment 1 $(2,000) 2 3 $(2,000) $(2,000) 4 5 $(2,000) $(2,000) 6 7 $(2,000) $(2,000) 8 $(2,000) Year $ 2,200* $1,666 334* 165 1 2 3 4 5 6 7 8 9 10 $ 330 330 330 330 330 330 330* $1,000 $1,200 900* 300 90 70 $ (350) (60) 60 350 700 1,200 $ 2,250* $ 160 200 350 395 432 440* 442 444 446 448 450 451 451 452 $10,000* $(2,000) $ 280 280 280 280 280 280 280 280* 280 280 280 280 280 280 $ 280 12 13 14 15 Sum of cash flow benefits $3,310 Excess of cash flow over initial investment $1,310 $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 *Indicates year in which payback was accomplished