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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 division's return on investment (ROI), which has exceeded 19% 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) $ 190,000 $ 400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17%. Click here to view Exhibit 14B-1 and Exhibit 14B-2. to determine the appropriate discount factor using tables. 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 profitability index for each product. 5. Calculate the simple rate of return for each product. 6a. For each measure, identify whether Product A or Product B is preferred. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg 3 Req 4 Reg 5 Reg 6A Product B Calculate the payback period for each product. (Round your answers to 2 decimal places. Product A Payback period years years Reg 2 > - Chapter 14 Saved Help Save & Exit Submit 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 division's return on investment (ROI), which has exceeded 19% 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) $ 190,000 $ 480,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,080 $ 52,000 The company's discount rate is 17% Click here to view Exhibit 14B-1 and Exhibit 143-2. to determine the appropriate discount factor using tables. 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 profitability index for each product. 5. Calculate the simple rate of return for each product. 6a. For each measure, identify whether Product A or Product B is preferred. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Reg 4 Req1 Reg 2 Reg 3 Req5 Req 6A Calculate the net present value for each product. (Round your final answers to the neares Product A Product Net present value d 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 division's return on investment (ROI), which has exceeded 19% 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) $ 190,000 $400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17%. Click here to view Exhibit 14B-1 and Exhibit 148-2. to determine the appropriate discount factor using tables. 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 profitability index for each product. 5. Calculate the simple rate of return for each product 6a. For each measure, identify whether Product A or Product B is preferred 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req 4 Reqs Req 6A Calculate the internal rate of return for each product. (Round your percentage answers to considered as 12.3%.) Product A Product B Internal rate of return % 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 division's return on investment (ROI), which has exceeded 19% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product Product B Initial investment: Cost of equipment (zero salvage value) $ 190,000 $ 400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor using tables. 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 profitability index for each product. 5. Calculate the simple rate of return for each product. 6a. For each measure, identify whether Product A or Product B is preferred. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Reg 4 Reg 5 Req 6A Calculate the profitability index for each product. (Round your answers to 2 decimal place Product A Product Profitability index 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 division's return on investment (ROI), which has exceeded 19% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product Product B Initial investment: Cost of equipment (zero salvage value) $ 190,000 $ 400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $72,000 $ 52,000 The company's discount rate is 17% Click here to view Exhibit 14B-1 and Exhibit 143-2. to determine the appropriate discount factor using tables. 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 profitability index for each product. 5. Calculate the simple rate of return for each product. 6a. For each measure, identify whether Product A or Product B is preferred. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3 Reg 4 Reqs Req 6A Calculate the simple rate of return for each product. (Round your percentage answers to considered as 12.3%.) Product A Product B Simple rate of return (Reg 4 Red GA > 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 division's return on investment (ROI), which has exceeded 19% 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) $ 190,000 $ 480,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370, 880 Variable expenses $ 128,888 $ 178, 800 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,800 The company's discount rate is 17% Click here to view Exhibit 14B-1 and Exhibit 14B-2. to determine the appropriate discount factor using tables. 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 profitability index for each product. 5. Calculate the simple rate of return for each product. 6a. For each measure, identify whether Product A or Product B is preferred. 66. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Rea 1 Reg 2 Req3 Reg 4 Reg 5 Req 6A For each measure, identify whether Product A or Product B is preferred. Net Present Profitability Payback Internal Rate Simple Rate of Value Index Period of Return Return 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 division's return on investment (ROI), which has exceeded 19% 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) $ 190,000 $400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,600 $ 52,000 The company's discount rate is 17% Click here to view Exhibit 14B-1 and Exhibit 14B-2. to determine the appropriate discount factor using tables. 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 profitability index for each product. 5. Calculate the simple rate of return for each product. 6a. For each measure, identify whether Product A or Product B is preferred. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6A Based on the simple rate of return, which of the two products should Lou's division accept Accept Product A Accept Product B Reject both products Reg 6A EXHIBIT 14B-1 Present Valer of SI (+) 79 Periods 4% 5% 6% 9% 10% 11% 12% 13% 14% 15% 16% 1744 ING 19% 2096 21% 22% 23%. 24% 25% 1 0.09520941 0935 09 69170.909 0.901 089 0.55 0.8770x70 ON OSS 0547 0.840 0.83303060X200.813 006 ONDO 2 0.935 0.97 0.890 0.873 0.8570.842 0.826 0812 0.797 0.78 0.769 0.756 0.741 0.731 0.7180.706 0.0714 0.63 0.672 0661 0.650 0,640 3 0389 0868 0.500 0.816 0.798 0.772 0.750 0.731 0.712 0,693 0,675 0.658 0.64 0.624 0.609 0.993 0.5790561 0.5510 537 0.524 0.512 4 0335 0.823 0.792 0.763 0.735 0.705 0.83 0.659 0.636 0.613 0.392 0.572 0.552 0534 0.316 0.299 0.482 0.467 0.451 0.437 0.433 0.410 5 0822 0.784 0.747 0.7130681 0.650 0,621 0.593 0.567 0.543 0.519 0.497 0.476 0456 0.437 0.419 0.402 0.386 0370 0.3550341 0326 6 0.79 0.746 0.705 0.666 06.30 0.596 0.564 0.535 0.507 0.450 0.456 0.432 04100390 3700.352 0335 0319 0303 0.299 0.275 0.262 7 0 760 0711 0.665 0623 0583 0 547 05130482 0.452 0425 0.400 0.376 0354 0333 0314 0.296 0.279 0263 0.299 0.2350 272 0.210 0.731 0.677 0.627 0.582 5400 502 0.467 0.4340404 0376 0351 0.327 0.105 0.285 10 266 0.2090 20110218 0 200 0.19 0.19 0.168 9 0.703 0.64 0.392 0344 0.500 0.460 0.4240391 0.361 0.333 0308 0.284 0.363 0.243 0.225 0.209 0.194 0.10 0.167 0.133 0.144 0.134 10 0676 0614 0.55 0.06 0.463 0.422 036 0352 0.322 0.295 0.270 0.347 0.227 0.308 0.191 0.176 0.16 0.149 0.137 0.126 0.116 0.107 11 0650 0.585 0.5370475 0.429 0.38 0.150 03170.287 0.261 027 02150.1950.178 0.162 0.18 0.135 0.123 0.112 0.105 0.014 0.086 12 0.623 0.357 0.49704440 397 0.356 0.3190.286 0.257 0.231 0.209 0.1870.165 0.152 013701240.1120 1020.092 0.003 0.0760069 13 0.601 0.530 0.469 0.415 0.368 0.3260.220.25% 0.229 0.2040.152 0.163 0.145 0.130 0.116 0104 0.093 0.084 0.075 0.065 0.06 0.055 14 0.577 0.505 0.4620388 0340 0.299 0.263 0232 0.205 0.18 0.160 0.14 0.125 0.11 0.099 0.088 0.078 0.069 0.062 0.055 0.019 0.014 15 0.535 0.481 0.417 0.362 0.315 0.275 0.2390 2090.183 0.160.140 0.123 0.1080095 0.0840.074 0.06 0.087 0.051 0.0150010 0.035 16 0534 04580 3940390.292 0.252 0218 0.1880.163 0.141 0.123 0.1070.09 0.081 0.071 0.0620.054 0.047 0.042 0.0360032 0.028 17 0.513 0436 0.371 03170270 0.231 0.198 0.17 0.16 0.125 0.108 0.093 0.080 0.069 0.060 0,052 0.045 0.039 0.014 0.030 0.026 0.023 18 0.494 0.416 0.30 0.2% 0.250 0.212 0.15 0.153 0.130 0.111 0.095 0.01 0.069 0.059 0.051 0.044 0.05% 0.632 0.028 0.034 0.021 0.015 19 0.475 0.396 0.331 0.277 0.232 0.194 0.16 0.138 0.116 0.098 0.0830070 0.060 0.051 0.03 0.037 0.631 0.007 0.023 0.00000170.014 20 0.456 0.77 0.312 0.25% 0.215 0.178 0.149 0.124 0.101 D.087 0.073 0.061 0.05 0.043 0.0370031 0,026 0.022 0.019 0,016 0.014 0.012 21 04390399 0.294 0 242 0.199 0.16 0.13 0.112 0.093 0.077 0.064 0.03 0.044 0.037 0.03 0.026 0.022 0.01 0.015 0.01 30.0110.009 22 0.422034202750226 0.1840. 150 0.1230101 0.03 0.06 0.056 0.046 0.035 0.032 0.026 0,022 0.01% 0,015 0,013 0.0110.0090.007 23 0.406 0326 0.262 0211 0.170 0138 0.112 0.091 0.074 0.050 0.019 0.040 0.033 0.007 0.002 0.018 0,015 0012 0.010 0.009 0.007 0.006 24 0390 0310 0.27 0.197 0.15 0.126 0.102 0.002 0.066 0.053 0.043 0.035 0.025 0.003 0.019 0,015 0.0130010 0.00 0.007 0.006 0.00 25 0.375 0.295 0.23 0.1540.146 0.116 0.092 0.074 0.059 0,047 0.008 0.030 0.034 0.020 0016 0.013 0.010 0.0090.007 0.005 0.005 0.004 26 0161 0.281 0.220 0.172 0.035 0.106 0.054 016 DOSE 0.042 0.013 0026 0.021 0.017 0014 0.01 0.000 0.007 0.005 0.005 0.004 0,00% 27 0347 0.268 0,207 0.16 0.125 0.098 0.076 0.060 0.047 0.037 0.029 0.023 0.01 0.014 0.01 0.000 0.007 0:006 0.005 0.004 0.003 0.002 28 0333 0.255 0.1960.150 0.116 0.000 0.00 0.05 0.042 0.033 0.026 0.030 0.016 0,012 0.010 0.008 0.005 0.005 0.000 0.003 0.002 0.002 29 0.321 0.243 0.18 0.141 0.107 0.002 0.063 001 0.037 0.029 0,022 0.017 0.014 0.011 0.008 0.006 0.003 0.000 0.003 0.002 0.002 0.12 30 0 308 0.231 0.1740.131 0.07990.075 0.05700440033 0.026 0.000 0.015 0.0120.00 0.00 0.00 0.00 0.003 0.003 0.002 0.002 0.001 40 0.308 0.142 0,097 0.067 0.046 0,032 0,002 0,015 0,011 0,005 0,005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 EXHIBIT 14B-2 Present Value of an Annuity of St in Arrears . Periods 4% 3% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 1993 18 20 21% 22% 23% 24% 25% 1 0.962 0.952 0943 0.935 0.926 0,917 0.9090.001 0.593 ORES 0.870 OR ORISS 0.47 0.540 0333 0.6 0.620 051 0.806 0.800 2 156 1.59 1.833 EXO 1.783 1.759 1.736 L713 160 161 1667 165 o 1.583 L366 1.547 1.528 1.509 1.292 1.474 1457 1.400 3 2.775 2.723 2673 2634 2.579 2.531 2.467 2244 2402 2361 232 233 2345 2.210 2174 2.140 2.106 2.074 2042 2011 1981 1952 4 3630 3.5463,465 387 3.3121.240 3.170 3.102 3.037 29742914 2855 27 2743 2.630 2639 2.589 2.520 27294 2.448 2.404 2.362 5 4452 4.319 4.212 4100 3.993 3.90 3.291 3 360$ 3517 3453 13 2703.1993.127 3058 2991 2.926 2.864 203 2745 2.689 6 5.2425.076 4,917 4.767 4.623 44864.355 4 231 2111 3.9983893.75 3.6 3.59 3.295 5410 3336 3.345 3.167 3.092 3020 2951 7 6.002 5.786 5.5825389 5.205 5.0BB 4.865 4.732 45644423 42.160 3030 39223.12 3.70 3605 3.508 3.416 3.327 3.242 3.161 8 6,733 6.463 6.210 5.971 5.7475.535 5.335 3.346 496 4.799 66994344420740739543.837 3.726 3.619 3.518 3.421 3.329 9 74357.106 6,802 6515 6.247 3.9955.759 5.5375.328 5.11229577226074451 4103 4.163 4.031 3.905 3.786 3.673 3.566 3:463 10 8.111 7,722 7.30 7.024 6,710 6.418 6145 559 5650 54355 216 50 433 4659 4,496 4339 4.192 4.054 3.921 3.799 3.6823.571 11 1.760 8.806 7.887 7.499 7.139 6.80$ 6,4956207 5938 567 5.453 5234 5099 48364.656 4.485 4327 4.1774,035 3902 3.776 3.656 12 9.3858.863 8.384 7943. 7.536 2.161 68146.2926190 59185660 5.413.1974.988 47934611 4.499 4.278 4.1273.985 3.851 3.725 13 1.9569.394 XXS3 R358 7.904 7.487 7.103 6.750 64346122 55 535 5303114910 4715 4333 4.362 4203 4.053 3912 3.780 14 10.5639.89 9.295 8.745 8.244 7.786 7.367 692 63 6310600573452685.229 5.00 400 461 4.432 4.365 4.108 3.9623.834 15 11.11% 10350 9.7129.108.559 80617,6052.2916 16.00 $473559.243.092 475 4.675 4,489 4.315415 4.001 1.89 16 11.65210.818 10.106 9.447 R853X313 7.624 7.399 69746.606 635 55.665.405 5.1624938 4.730 4.516 4357 4.189 4033 3.887 17 12.166 11 274 104779.763 9.1228544 3.022754971306.72 373 6.647 52 54755222 4.990 4.775 4.576 4.391 4219 4.0593.910 18 12.689 11.40 10.828 10.0599,3728756.2017.702 7.250 6.840 6.457 613SSIK 5.514 5.2735033 48124606 4419 42434.000 3.928 19 13. 134 12 08 11.15 10.336 9.606 8.950 8.365 78397566 6.936550619 575.584 5.316 5.70 4.843 4.635 4.442 4.263 4,097 3.942 20 13 590 12.462 11.470 10.5949.818 9.129 8.5147961 74692566236259 539 5.628 5353 S.101 4820 4657 410 42794.110 3954 21 14.009 12.821 11.764 10.836 10,017 9.292 8689 8.0175 7.562 7.10066876312 59735.665 3.354 5.127 4891 4675 4,476 4.292 4.121 3.963 22 14451 13.163 12.042 11.061 10.301 9.442 8.7728.1767645 7.170 67436359 601 5.696 5410 5149 4.909 4.6790 4.255 4302 4.130 3.970 23 14.857 13.489 12.303 11.272 10.371 9.580 8.863.366 7.7187.230 629263996.6445.7235.433 5.169 4925 4.703 4.499 43114137 3.976 15.247 13.790 12.550 11.460 10.529 9.707 8,965 K.3487.784 22656535 6.434 60035.746 3.451 1 4.937 4.713 4.507 4318 4.143 3.981 25 15.622 14.094 12,783 11.650 106759,821 9,077 8.422 783 7330 63 65 60975.766 5467 5.195 4948 721 4.514 4323 4147 3.985 26 1593 14.375 13.003 11.826 10X109.929 9.161 R.45 7.896 7.372 6905 6.495.783 5450 5206 4.956 4.725 4.520 4328 4.151 3.985 27 1633014683 3211 110 10915100279217 RSS 7432900955514 6135520552995215 964 4.73 4594 413241543990 28 16.66 14.895 13.406 12137 11.65110,116 9.307 8.607 79847441 69 6534 61525810 5502 5223 4.920 4.739 4.525 4335 4.157 3.992 29 1694 13. 141 13.591 1227 158 10.1959.370 650 K0022470537613305.51052294975 4.743 491 433741593994 30 17.292 15.372 13.769 12.409 11 258 10.274 9,4278.699055249670086566617582953175235 4999 4.746 534 4339 4160 3.999 40 19.793 17.159 15.046 13132 11.925 10,7579.779895134476347005662631571 55 5258 4997 4760 4 544 4.347 4.166 3.999