(Please see the attached file for the complete problem explanation)
There are 8 projects and there are two questions that must be asked of all of them:
1. Assume that the projects are replicable and discount rate is 10%! Choose only one method to rank the projects. Clearly mention why you chose that method and which assumptions you made to choose that method. Remember there are 8 mutually exclusive projects!
2. Is your method sensitive to discount rate?(use 12% discount rate)
(Please see the attached file for the complete solution in Excel format).
NPV - 2 ($90.08) ($128.79) ($173.04) ($30.41) ($92.96) ($35.71) $99.35 ($72.25)
Rank - 2 5 7 8 2 6 3 1 ...
This solution provides examples of the net value present (NPV) for 8 projects.