Comprehensive 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 His annual pay raises are determined by his divisions return on investment (ROI), which has exceeded 22 each of the last three years 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) $ 350,000 $ 550,000 Annual revenues and costs Sales revenues $ 390,000 $ 470,000 Variable expenses $ 178,000 $ 210,000 Depreciation expense $ 70,000 $ 110,000 Fixed out of pocket operating costs $ 87,000 $ 67,000 The companys discount rate is 20 3 Calculate the internal rate of return for each product (Show your work)

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Comprehensive 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  His annual pay raises are determined by his divisions return on investment (ROI), which has exceeded 22  each of the last three years  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) $ 350,000 $ 550,000 Annual revenues and costs  Sales revenues $ 390,000 $ 470,000 Variable expenses $ 178,000 $ 210,000 Depreciation expense $ 70,000 $ 110,000 Fixed out of pocket operating costs $ 87,000 $ 67,000 The companys discount rate is 20   3  Calculate the internal rate of return for each product  (Show your work)

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Comprehensive Problem - Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a

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	Product A	Product B
Initial investment:
Cost of equipment (zero salvage value)	$ 350,000	$ 550,000
Annual revenues and costs:
Sales revenues	$ 390,000	$ 470,000
Variable expenses	$ 178,000	$ 210,000
Depreciation expense	$ 70,000	$ 110,000
Fixed out-of-pocket operating costs	$ 87,000	$ 67,000