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 25% 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) $ 370,000 $530,000 Annual revenues and costs: Sales revenues $400,000 $ 510,000 Variable expenses $ 180,000 $ 250,000 Depreciation expense $74,000 $ 106,00 Fixed out-of-pocket operating costs $ 85,000 $72,000 The company's discount rate is 19% Click here to view Exhibit 148.1 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? BOHIBIT 140-1 Present Value of Star 16 2 . 11 WO Pods 45 5% 6% 7 9 10 11125 034 10 103 19% 20% 2012 22 20 245 25 1 0962 0952 094 0935 0926 0907 09090901 0.893 0335 0.877 0.870 0.362 0.855 0.347 0340 0.833 0.826 0820 08 0.906 0.000 0.925 0.9070890 0.873 0.857 0.542 0.026 0312 0797 0783 0769 07560743 0731 073 0.706 0.694 068 0672 0.651 0650 0640 3 0899 0064 0340 0916 0.794 0.772 07510731 0712069306750658 0641 0624 0.609 0.593 0.579 0.566 0.551 0.587 0.524 0512 4 0.955 0822 0792 0763 0735 0708 0683 0.659 0636 060 0592 0572 0.552 0534 0516 0499 0.412 0.467 0.451 0.437 0423 0410 0.822 074 077 073 06010650 0621 0.593 0567 053 059 0497 0.476 0.456 0.437 0.419 0.402 0386 0.370 0355 0.3410328 07900745 0705 0666 0630 056 0554 055 0507 0.400 0.456 042 04100390 0.370 0.352 0335 0.319 0.303 0.289 0275 0262 7 0750 0711 0065 0623 0580 0541 050 0.482 0.452 0425 0.400 0.376 0354 0333 0.3140296 0279 0.263 0249 0235 0222 0280 0731 06770027 0502 0.540 0502 0.467 0.04 0.404 0.376 0351 0.327 0.305 0205 0.266 0249 023 028 0204 0191 0179 9 07000545 0.502. 0544 0.500 0.400 0.424 0.91 0.361 033 030 0294 0203 020 0225 0.209 0154 0100167 0155 0544 0714 10 0.670 0054 055 0.500 0.453 0.422 0.336 0352 0.22 0295 0270 0247 0227 0200 0191 016 0020549 03701260116 0307 11 0.850 055 0527 0.475 0429 0388 0.50 0.720287 0201 0237 021501950178 0.82040 0035003 OTO 0103000006 06750557 046704440391 0.356 0.31 0206 0252 021 02080 0152 0170124 0112 03020092 003 0028 0.009 0.601 050 000 00150360 0.326 0290 0.250 0229 0204 052 0163 01510011001040093 0064 0075 00580061 0055 0.77 0.505 0.412 0303030 0.299 0203 0232 0205 0101 0.100011 0125 0090 0.000 0.000 0.00 0.0020055 0019 00 0355 041 040.362 0.15 0.275 023 0200 0110001100123 000 0005 004 GON 0065 ODST 00510 0010 0005 0534 0458030230270252 0210003 OM 0122 0107 0000 0000710002 0054 000 000 0036 0000 0500000 0.00270 01010000 005 0100 0000 0000 0000 0000 0052 000 0000 00360030 0.0200023 DA00500290250020000151 000 11 0.005 00000000500051 00 00 00 00 00 00 00 0000 009940164 OD 0116 20 0000 0000 0000 0000 005100000000000000000000 0456 09085020000240104 000 con 0 0.051 000 000 000 0.000 0.002 00190 00 000 21 000000000000015 02 0003 007 0064 0053 004 0000 0.0200622 00015 000 001 000 020300070154 0001230901 0000 0000 0.056 00 00 002 0.0360022 0.01 0.015 000 001 000 000 22 100032002020211010 000 OT2 000 ON 0060 000 0000 000 002 0.02200001500000000000000000 24 0.30 0.110300107 0005 003 002 0000053 000 000 0021 0023 000 000 000 000 000 000 000 000 02950 01 001 0002 00 00 00 00 0030 0004 0030 OO 000 000 0000 000 000 000 000 20 0.0 0.0 072002 0960040006 005) 0012 000 000 000 000 000 000 000 000 000 000 000 000 23 1470202014 035 000 000 0000 000 000 002 001010000000000000000000000000 2 om 0255001500000000000000000000000000002 0.000 0.000 0.000 0.005 000 0002 0.000 0.000 002000 0103 0.0000 0000 002 0.022 000 0000 0000 000 000 0004 0000000000000 30 002004 00000075 0057 000 000 000 0020 000 0012 0.003 000 000 0000 0000 0000 000 000 000 02000100001 000 000 0002 0010011 0000 000 000 000 0000 000 000 000 0000 0000 0000 0000 0.000 HIT 140-2 Present Value et en Annuity of S1 in Artoert; 6710 Periods 45 5% 0% 7 94 90% 11% 15% 18% 204 205 223 23% 24 259 1 09620952 0943 09350926 0917 0.909 0.901 0890 0.885 0.877 0.870 0.862 0855 08470840 033 0.326 0820 0800306 0.800 2 1885 1859 1300 1300 1733 159 1736 1713 1690 1663 1647 1626 160515851566 157 158 1509 1492 1474 1457 1440 3 2775 27732673 2624 2577 2531 2457 2414 2402 2361 2322 2283 2245 2210 2174 2140 2006 2074 2042 201 1981 1952 4 2.630 3.54634653387 3312 3.240 21703102 2007 2974 294 2855 2798 2743 2690 2639 2589 2540 2494 2.6482404 2352 5 4452 4329 4212 400 1993 3.890 3.791 369 3605 3517 3433 3352 3274 21993127 2058 2991 2.926 2564 2803 2745 2699 5 5.242 5020 4917 4767 4623 4486 4355 42314 3.998389937043685 3589 3.498 3410 3326 3215 216730923020 2.951 2 600257585582 5395206503 43684712 4564 4423 4200 4100 40393922 3.012 37063605 3.500 3.416 3327 32423.101 3 43 6200 5.971 57475.535 5.335 556 4.968 4799 4639 4487 434 4207 2078 1954 1837 3725 761935183421 3329 9 7435 2100 8002515 6 207 5.995 5759 537 5320 512 40464772 4607 4451 4303 40013905 278616732566 3.463 10 11 7722 2360 7024 654550095650 5426 521 5019 433 4659 494 43394192 40543923 3.799 2627571 11 1.70007307 7499709 6,305 6495 6207 5900 5.6875453524502943062656443412247 403530021775 1656 0714790 7536 7161 6.146.428445985600 541 5197 498 47934611 409 4278427 2.905 35 2725 13541351358 7901 7607 71030750 6.624 6122 012 55835342 5110 4910715 45133642030531912 3700 H 1032955745 1241278 73576902 6628 6302 6.002 57245.468 52295000 4.002 401 42054100 2002 15 10:3809712 5900 159001 70067191 4264255475.575 5.324 50924366754915453 2001 2050 M 11652 100 9.065 10 78242379 69746504 6205 5.954 566 5005 502901473045963574100 2003 2002 11274 0797539022 8544 30227549712062296.373 600 579 505 5222 4900 47754570491 21909 1910 1 120500 101 0050372 6756 1201 1702 7250654084676128 5.553452735033 40 46001000002928 3034 2015 15 10:3369604950357073666308 6.5506198 5.872 556 5.16 5090.400 405 4200 4031542 30 3500210211600.504.13 9129 354793 7400 1025 16236259 5.939 5.621153505101 67604279110 24 10092217164 089610179292 8549 075 75627102 6607 63051973 5665 524 507 401 405429221 22 1451 2017102019.442 72170 7645 710 n 409 410 4200 340123031212 1037.500 063506075096 5410 5549 1970 3305206270 7230 6.792 799 601457235.212 5567 4925405499 24 15.30 799 2.550 T905299707 4 1975 957704 123 656.04 GO 525.0515182 49024 4507 1981 15.622270106759 10102200730 1731647 555.00 5155 41721 2514 43210 1995 20 150000126009929 9961 478902372 9066491 6110 57835.400 5201 495647284530425 10211 2900 1907 1905 10627 52354000 7400 6935505 57905492 525 54734 2 13 400 400 12932 453443524154 7990 1051 10:15 930316027984741 590165146152 26 5045 50 5502 5223497053043 292 250122707156 090 910 660 90 700 6900 6,561 6160 30 192921520 2.409 9125810274627 604 005676700306617) 5900 5510 52294973 600 4:10 1994 5.829 557527529394748 34 1956 1993 1504621025 10.77 0.729.951124476547806642m 555055849914700 454303999