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 $($RO$),$ which has exceeded $23\%$ each of the

last three years. He has computed the cost and revenue estimates for each product as follows:

The company's discount rate is $18\%.$

Click here to view Exhibit $78-1$ and Exhibit $78-2,$ to determine the appropriate discount factor using tables.

Required:

Calculate the payback period for each product.

Calculate the net present value for each product.

Calculate the internal rate of return for each product.

Calculate the project profitability index for each product.

Calculate the simple rate of return for each product.

$6$a$.$ For each measure, identify whether Product A or Product B is preferred.

$6b.$ Based on the simple rate of return, Lou Barlow would likely:

Complete this question by entering your answers in the tabs below.

Req $3$

Req $4$

Req $5$

Req $6$ A

Req $68$

Calculate the net present value for each product. $($Round your final answers to the nearest whole dollar amount.$)$

Req $1$

Req $2$

Req $3$

Req $4$

Req $5$

Calculate the internal rate of return for each product. $($Round your answers to $1$ decimal place i$.$e$.0\mathrm{.}123$ should be considered

as $12\mathrm{.}3\%.)$

Req $1$

Req $2$

Req $3$

Req $4$

Req $5$

Req $6$A

Calculate the project profitability index for each product. $($Round your answers to $2$ decimal places.$)$

Req $1$

Req $2$

Req $3$

Req $4$

Req $6$ A

Req $68$

Calculate the simple rate of return for each product. $($Round your answers to $1$ decimal place i$.$e$.0\mathrm{.}123$ should be considered

as $12\mathrm{.}3\%.)$

Req $1$

Req $2$

Req $3$

Req $4$

Req $5$

For each measure, identify whether Product A or Product B is preferred.

Req $1$

Req $2$

Req $3$

Req $4$

Req $5$

Req $6$A

Based on the simple rate of return, Lou Barlow would likely:

OAccept Product A

Accept Product B

Reject both products