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Citco Company is considering investing up to $575,000 in a sustainability-enhancing project. Its managers have narrowed their

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Answer #1
Project A Project B Project C
Required Investment -575000 -729000 -388000
Annual cost savings 115000 81000 97000
Projected Life 8 Years 10 Years 6 Years
Salvage value 84000 62000 36000
Payback period 5 Years 9 Years 4 Years
NPV @ 11% 53253.9432 -230137 41609.24
Profitability Index @ 11% 1.09 0.68 1.11
Internal Rate of Return 13.40 % 3.21 % 14.51 %

NPV = Present value of cash inflows - initial cash outflow

Profitability Index = (NPV +Initial Investment) / Initial Investment

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