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can someone help me with this problem Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two
can someone help me with this problem
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five- year period. He has computed the cost and revenue estimates for each product as follows: Product A Product B Initial investment: Cost of equipment (zero salvage value) $ 340,000 $540,000 Annual revenues and costs: Sales revenues $ 390,000 $ 490,000 Variable expenses $ 176,000 $ 226,000 Depreciation expense $ 68,000 $ 100,000 Fixed out-of-pocket operating costs $ 84, eee $ 64,000 The company's discount rate is 18% Ignore income taxes. Note that Excel or a financial calculator must be used to calculate items 2-4. Required: 1. Calculate the payback period for each product 2. Calculate the net present value for each product. 3. Calculate the internal rate of return for each product. 4. Calculate the project profitability index for each product 6a. For each measure, identify whether Product A or Product B is preferred." Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 6A Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product B Product A years Payback period years Navt Req 1 Req 2 Req 3 Reg 4 Reg 6A Calculate the net present value for each product. I Product A Product B Net present value Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg 3 Reg 4 Req 6A Calculate the internal rate of return for each product. (Round percentage answers to 1 decimal place.) Product A Product B Internal rate of return Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req Reg 6A Calculate the project profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Project profitability index Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req3 Reg 4 Req 6A For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period Internal Rate of Return ( Req 4 Rec SA Step by Step Solution
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