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Consider the cash flows from 8 different investment opportunities presented. Follow the instructions below vs. the instructions in the case: Evaluate the cash flows presented.
Consider the cash flows from 8 different investment opportunities presented. Follow the instructions below vs. the instructions in the case:
- Evaluate the cash flows presented. Which would be your top 3 projects simply by looking at the cash flow timing presented? Note that the year in which payback is achieved is indicated in the data provided.
- Now calculate the NPV of each of the 8 opportunities and rank the opportunities in order of greatest NPV to least. You can use a 10% discount rate for an initial evaluation.
- How would your results differ if a 14% WACC was assumed?
Provide your calculations in a spreadsheet format and be sure to answer the questions above.
Exhibit 1 The Investment Detective Projects' Free Cash Flows (dollars in thousands) * Indicates year in which payback was accomplished
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