Question
Citco Company is considering investing up to $455,000 in a sustainability-enhancing project. Its managers have narrowed their choices to three potential projects. Project A would
Citco Company is considering investing up to $455,000 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 amount should be indicated by minus sign. Round your "NPV" answers to whole nearest dollar amounts. Round your "PI" and "IRR" answers to 2 decimal places.)
PA11-6 Evaluating Sustainability Projects [LO 11-2, 11-3, 11-4, 11-6] Citco Company is considering investing up to $455,000 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, utlizing 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 o st of capital is 10%, complete the table below by computing the payback period, NPV Profitability Index, and Internal Rate of Retum. uture alu Present alue o S Eu alue Annu of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Negative amount should be indicated by minus sign. Round your "NPV" answers to whole nearest dollar amounts. Round your "PI" and "IRR answers to 2 decimal places.) Project B Project C Project A Redesign Remodel office New training facility) Required Investment Annual Cost Savings Project Life Savage Value Payback Period NPV @ 10% Proetebility Index @ 10% Intornal Rato of Rotum S (455,000) 91,000 S (459,000) 51,000 S (284,000) 71,000 8 years 10 years 6 years 1,000 66,000 31,000 ears ears years 2. Based strictly on the economic analysis, in which project should they invest? Projact A Project B Project CStep by Step Solution
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