Question

please do NOT round up the intermediate calculations and use the value factors from the table. thank you.

Citco Company is considering investing up to $714,000 in a sustainability-enhancing project. Its managers have narrowed their choi to three potential projects. . Project A would redesign the production process to recycle raw materials waste back into the production cycle, saving on dire 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 8%, complete the table below by computing the payback period, NPV, Profitability Index, and Inter 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 si Round your "NPV" answers to the nearest whole dollar amounts. Round your "Pl" and "IRR" answers to 2 decimal places.) Project B Project C Project A (Redesign production process) (714,000) (Remodel office building) (New training facility) $ (396,000) $ 99,000 $ $ $ $ Required investment Annual cost savings Project life Salvage value Payback period NPV @ 8% Profitability index @ 8% (656,000) 82,000 10 years 78,000 years 119,000 8 years 90,000 4 years 466,707 6 years 32,000 $ $ $ years $ 65.36 Internal rate of return % % %

Answer 1

solution Project A 1) camn of Payback period :- mitial Investmat Payback Period Annual cash intlow thuis * 7146w $11gwo ② Cash of NPU NPV = PV of cashin flow - Initial innestared- - 6 year Po of cash inflow. Annual cost saving (PU AF@&l., 8 yem) + salvagevels (PVIF @81., year) ligooo X5.7466 + 90ow x.5403 $ 683 845.4 448,627 = 732469.4 NPV = $ 7,32,469.4 - $71400 =$18.469.4 B Architability Index CPIJ PV of cash inflow =$732 469.4 Initial inwestron $714,000 $18469 = 1.02 6 IRR IRR = PV of cash inflow =PU of Cashout flow pv@ 9.1 - bra $ 732 469.4 pv@ 94 $119000 x 5.5348+ 900w xo solo = $_703812.2 Residure OF LOR (HOR- LOR) IRR LORT LDR HOR 132 469.4-1on 81.+ 732469.4-703813-2 8.6405 IRR = 8.640 - PVue Prat (3.81)

Project B can of Payback period 656 ovo 6 - Byear $ 8200 can of NPV PU of cash inflow - 82000 X 6.7101 + Toow X.4632 $ 586357.8 NPV = $586 351.8 656000 = - 69,642 (5) 3) PI 68 $$86 357-8 $ 6560vo 4 IRR Pu@ 81 586357.8 pu@ 5% $ $ 7.7217*8200 + 78000 X.6139 = $ 681063.6 681063.6-656000 stit *31 -681063.6 586357.8 IRR 5.79.7 IRR Projects © Payback period eload h = (2) = $ 3960o $ 99 100 Puof Cash flow 99000 *4.6229+ 32ow *•6302 = $7,77,833.5 $.477833.5-5396000 = $6 81833-5_ORS * B1,834 477833.5 1.91 NPV (3) PI * = $39600

(4 IRR. 2 Pv 08. - 17 837. SS Pu@ 1st = 99000 X 3-7845 + 32600X애323 3 22119.) 17837. S - BTCN. 2 - 너 17837 S - 32845-) 1.LX CC 8 (-4. RR = 14-4..