This case presents the cash flows of eight unidentified investments, all of equal initial investment size. Your task is to rank the projects. The first objective of the case is to examine critically the principal capital-budgeting criteria. A second objective is to consider the problem that arises when net present value (NPV) and internal rate of return (IRR) disagree as to the ranking of two mutually exclusive projects. Finally, the case is a vehicle for introducing the problem created by attempting to rank projects of unequal life and the solution to that difficultythe equivalent-annuity criterion.

Please match the project # above with the designated product type below:

Use the cash flows of the projects listed to identify the type of project. The assignment is one matching question. Please match the project # (above) with the project type listed below.

A.	Partially Amortizing Bond
B.	Advertising Campaign
C.	Zero coupon bond
D.	Nuclear Power plant; pesticide factory
E.	Home Mortgage
F.	One-year bond
G.	Mine
H.	Orchard

7 8 $(2,000) $(2,000) $1,200 9001 300 1. Project free cash flows (in thousands of dollars) Project number 1 2 3 4 5 6 Initial investment $(2,000) $(2,000) $(2,000) $(2,000) $(2,000) $(2,000) Year 1 $ 330 $1,666 $160 280 $2,2001 2 330 3341 200 280 3 330 $ 165 350 280 4 330 395 280 5 330 432 280 6 330 4401 280 7 3301 442 280 8 $1,000 444 2801 9 446 280 10 448 280 11 450 280 12 451 280 13 451 280 14 452 280 15 $10,0001 $(2,000) $280 $(350) (60) 60 350 Nino 90 $ 70 700 1,200 $2,2501 $2,165 $10,000 $3,561 $4,200 $2,200 $2,560 $4,150 Sum of cash flow benefits $3,310 Excess of cash flow over initial investment $1,310 $165 $8,000 $1,561 $2,200 $200 $560 $2,150 Indicates year in which payback is accomplished. 7 8 $(2,000) $(2,000) $1,200 9001 300 1. Project free cash flows (in thousands of dollars) Project number 1 2 3 4 5 6 Initial investment $(2,000) $(2,000) $(2,000) $(2,000) $(2,000) $(2,000) Year 1 $ 330 $1,666 $160 280 $2,2001 2 330 3341 200 280 3 330 $ 165 350 280 4 330 395 280 5 330 432 280 6 330 4401 280 7 3301 442 280 8 $1,000 444 2801 9 446 280 10 448 280 11 450 280 12 451 280 13 451 280 14 452 280 15 $10,0001 $(2,000) $280 $(350) (60) 60 350 Nino 90 $ 70 700 1,200 $2,2501 $2,165 $10,000 $3,561 $4,200 $2,200 $2,560 $4,150 Sum of cash flow benefits $3,310 Excess of cash flow over initial investment $1,310 $165 $8,000 $1,561 $2,200 $200 $560 $2,150 Indicates year in which payback is accomplished