Essay About Set Of Project Cash Flows And Rank Of These Projects

Bufn 640 Case 1
Q1. For each set of project cash flows, calculate the Return on Investment (Excess of cash flow over initial investment divided by the initial investment). Based upon these criteria, rank the projects. Answer: ProjectReturn on Investment11310/2000=0.6552165/2000=0.082538000/2000=441561/2000=0.780552200/2000=1.16200/2000=0.17560/2000=0.2882150/2000=1.075 So, the rank of these projects based on the Return on Investment is:Project: 3  5  8  2  4  1  7  6   Q2. For each set of project cash flows, calculate the payback period. Based upon these criteria, rank the projects. Answer: ProjectPayment period16+(2000-330*6)/330≈6.0622314+2000/10000=14.246+(2000-160-200-350-395-432-440)/442≈6.0557+(2000-280*7)/280≈7.1460+2000/2200≈0.9171+(2000-1200)/900≈1.8985+(2000+350+60-60-350-700-1200)/2250≈5.04 So, the rank of these projects based on payment period is:Project: 6  7  2  8  4  1  5  3       Q3. For each set of project cash flows, calculate the Internal Rate of Return (IRR).  Based upon these criteria, rank the projects. Answer: ProjectRate of Return (IRR)1IRR(-2000,330,330,330,330,330,330,330,1000)           IRR≈10.87%2IRR(-2000,1666,334,165)                                           IRR≈6.31%3IRR(-2000,0,0,0,0,0,0,0,0,0,0,0,0,0,0,10000)          IRR≈11.33%4IRR(-2000,160,200,350,395,432,440,…,-2000)            IRR≈12.33%5IRR(-2000,280,280,280,280,280,280,…,280)             IRR≈11.12%6IRR(-2000,2200)                                                      IRR≈10.00%7IRR(-2000,1200,900,300,90,70)                                     IRR≈15.26%8IRR(-2000,350,60,60,350,700,1200,2250)                IRR≈11.41%