Citco Company is considering investing up to $465,000 in a sustainability-enhancing project. Its managers have narrowed...

 

Transcribed Image Text:

Citco Company is considering investing up to $465,000 in a sustainability-enhancing project. Its managers have narrowed their choices to three potential projects. • Project A would redesign the production process to recycle raw materials waste back into the production cycle, saving on direct materials costs and reducing the amount of waste sent to the landfill. • Project B would remodel an office building, utilizing solar panels and natural materials to create a more energy-efficient and healthy work environment. • Project C would build a new training center in an underserved community, providing jobs and economic security for the local community. Required: 1. Assuming the cost of capital is 10%, complete the table below by computing the payback period, NPV, Profitability Index, and Internal Rate of Return. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your "NPV" answers to the nearest whole dollar amounts. Round your "PI" and "IRR" answers to 2 decimal places.) Project A Project B Project C (Redesign production process) (Remodel office building) (New training facility) Required investment Annual cost savings (465,000) (504,000) (292,000) 93,000 56,000 73,000 Project life 8 years 10 years 6 years Salvage value 76,000 61,000 38,000 Payback period NPV @ 10% years years years Profitability index @ 10% Internal rate of return % % % %24 Citco Company is considering investing up to $465,000 in a sustainability-enhancing project. Its managers have narrowed their choices to three potential projects. • Project A would redesign the production process to recycle raw materials waste back into the production cycle, saving on direct materials costs and reducing the amount of waste sent to the landfill. • Project B would remodel an office building, utilizing solar panels and natural materials to create a more energy-efficient and healthy work environment. • Project C would build a new training center in an underserved community, providing jobs and economic security for the local community. Required: 1. Assuming the cost of capital is 10%, complete the table below by computing the payback period, NPV, Profitability Index, and Internal Rate of Return. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your "NPV" answers to the nearest whole dollar amounts. Round your "PI" and "IRR" answers to 2 decimal places.) Project A Project B Project C (Redesign production process) (Remodel office building) (New training facility) Required investment Annual cost savings (465,000) (504,000) (292,000) 93,000 56,000 73,000 Project life 8 years 10 years 6 years Salvage value 76,000 61,000 38,000 Payback period NPV @ 10% years years years Profitability index @ 10% Internal rate of return % % % %24

Answer rating: 100% (QA)

Project A Project B Project C Investment 465000 504000 ... View the full answer