Project ranking
The project can be ranked using the cash flow, but the inspection is not a good method to measure because there is no analysis of the risks for the cost of capital and the time value of the company’s money.
The ranking according to the cash flow inspection.
There are various quantitative ranking methods, which include payback period (PP), the interest rate of return (IRR), net present value (NPV), profitability index (PI). To rank the projects, I used the cost/ benefit ratio criteria where the internal rate of return and NPV are the best methods used to rank the project because they are the most experienced methods in real-life situations, and they address the central goal which is about maximizing the shareholders’ funds.
From the different quantitative methods, the rankings differ from the simple inspection of cash flow. Project 2 is the last one because it makes a negative NVP and a low-interest rate. As highlighted, Project 7, 3, 5, and 4 are the best projects for investing because they have the best return rates. Project 7 has the highest break-even, and project 3 has the highest return rates. In this method, the payback period is ignored since it overlooks the cost of capital and time value.
Project 1: oil field service companies such as Aker Solutions
Project 2: grocery store such as Costco wholesale
Project 3: electric cars such as tesla company
Project 4: insurance company such as progressive (PGR)
Project 5: refiner company such as petroleum oil refinery
Project 6: retail design store for custom clothes such as kinsfolk store
Project 7: broadcasting company such as ViacomCBS (NASDAQ: VIAC)
Project 8: car manufactory such as Toyota group