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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.

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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 23% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Products Initial investment cost of equipment (zero salvage value) $ 290,000 $ 490,000 Annual revenues and costs: Sales revenues $ 340,000 $ 440,000 Variable expenses $ 154,000 $ 206,000 Depreciation expense $ 58,000 $ 98,000 Fixed out-of-pocket operating costs $ 79,000 $ 59,000 The company's discount rate is 15% Click here to view Exhibit 148-1 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 faccept? Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Reg 3 Req4 Reg 5 Req 6A Reg 60 Calculate the internal rate of return for each oroduct. (Round vour nercentaon answers to 1 decimal nlara le 0.123 should he DOCT 148-2 Part Value of an Annuity of Sin Area 5700 7433 Panoos 6 9 100 th OS 10% 155 10% TO 19% 205 21 22 22 24 25 0.002 0952090 0935 096 090 0909 0.901 0893 0855 0.8770870 0.362 0.855 0.347 0.840 0333 0.826 0320 080 0.008 0.800 2 100 150 333 1009 1789 1750 1736 1690 1668 1667 1626 1005 1595 1566 1547 1520 15091492 1474 1457 1440 2 2.775 2.723 2673 2094257 2511 24407 2444 2402 2361 2222 223 2246 2210 2114 2500 2106 2074 2012 2011 1901 1952 31000 15162665 2307 30 2.200 300 3.102 1032 2.974 2.994 2355 2790 270 2690 2609 2599 2.540 2494 2448 2.1042362 5 452 42 4212 4100 1993 1903791 1696 3505 15172493.352 3274 3199 31273058 2991 2926 2864 2.300 2.745 2.609 5325.076 4.997 4707 406 41554231 3.998 299 3.7843685 3589 1498 3410 3326 3245 37 3.092 3020 2951 7 0.002578 5582 57095 205 5033 4309 4712 4564 4423 4208 400 4039 2922 2812 3706 1605 3500 3.41633271242 3161 62 6.480 6.210 5.971 5.535 5.255.546496842994639 4.487 43444207 4070 1.954 35573728 369 3.513421 3329 2300 6.000 6.515 5.20 5.905 5759 5537 5328 500249064772 4607 4.451 4300 4183 40313.905 3786 3673 3.566 3.463 10 7722 2360 7024 6710 5.418 6545 5 800 5650 5.426 5.216 5019 4830 4659 4494 4309 4192 4054 2922 37993682 3.571 11 3.700 3067807 7,499 700 6 BOS 6.4956207 5938 5.687 5.453 5234 5.029 4806 4656 4.436 4327 417 40053902 3776 3650 2 2040 7535 2151 6,314 6.492 6194 5 918 5580 5.421 5197 4.980 47934611 449 4278 4127 3.985 1954 1725 9900 9.394 BAS 58 2904 7487 7.103 6750 6.424 6122 5.342 5.583 5342 5158 4910 4715 4533 4.362 4203 405329123780 105639.099 9.295 0.75 3.244 2786 73676902 6.628 6.302 002 5724 5.408 5.229500843024611 4.432 4265 4108 3962 3.824 15 10.3809712 9100 8559 3001 7.600 2191 6.811 6462 6.542 5.347 5.575 5324 5092 48754675 4.499 4.315 4150 4001 3.859 10 16523101069407 3851 30 782423796934 6604 6265 5954 5660 5.405 5102 4933 47305364.357 418940333587 12,356 T27610477 973 9.222 354 302275497120 67296.373 6047 5749 5.475 5222 4.990 47754576 4591421940591910 12.650 11000 10123100599372 8758 8201 7702 72506540 6.457 612850105.534. 5.2735033 48124608 441942034000 3.920 004 120057150 103069604950 8.365 782973666938 6.550 6198 5877 5.584 5.30 5.0704343 46154442 42634097 1942 20 05002452100 90594 9129 8.5347963 746970256,023 6.259 5.9295628 5353 51014370 4657 44604279410 3954 21 14.029 12.821 1758 300619017 9.292 0649 8.075 756271026687 6312 5973 5655 53945127 4.991 4.675 44764292 4.121 2.900 544502042 061102019.442 0.7728.176 2545 2170 67436.359 0.011 5 696 5.410 5549 4.909 469044884302400 3.970 S2057423031127203710580 8.3 8.266 2715 7.250 6.792 6.3996046 57235.02 5167 24 15 201 3.790225501146910529 9.707 4925 47034499 4311 402 3970 905 8340778472036835 604 60735745 54515102 4937 470 45074318413 25 15.622 4094 27011654906750823 2.991 9077842278402330 8.372 6.464 6.0975765 5.467 519549404721 4.51443234507 3995 20 15.90) 510001320109100929 9151 1.4307896 2372 6.906 6.491 6118 5735.400 5206 495647265204323495 22 100 1450 121 3.980 11.907 10.9051002792278567907409 6.905 654 6136 579854925215 4.964 4734 4524432454 28 156631606 2007 3990 MOS 10716 9.307 1.602 2984 7441 6.9616534 51525350 5502 52234970 4739452843354159 29 1450 150122811158 1909.370 850 3.022 7470 5.900 65516.3665120 5510 522949740 451404159 3992 30 129352 205 2100 1250 102434271618.055 74967000 6566617758295.507 5235 497947484534 430000 1994 3995 40 19700073270925107579799510244 76047105 6612622355755852504997475054302 306 3999 DOHIBIT MO-1 Pretent Valuerst Parol 45 5 09 14 15 19 201 27 221 22 265 253 1 090209520409350920 090 0.909 0.901 0.893 0385 0770870 0362 0.55 0347 0.840 033 0.326 0320 000 0006 0.800 2 01925 0907 0.000373 035 0342 0825 0020797 07830769 07560730731 070 0.706 0094 0683 0.672 0661 0650 0640 0164 084008160294 07207510731 07120093 0675085806110524 0609 0.53 0579 0554 0551 0.537 0.524 0512 4 0155 03230792 070) 0735 07000680 0.659 0.536 060 0592 0.572 0552 0534 05160499 0.482 0.467 0.451 0.07 0.423 0410 5 0022 07140707070 06010650 0.621 050 0567 0.50 059 0.497 0.4760456 047 0419 0402 0386 03700355 03410320 0.750 0.746 0705 0.656 0030 0.506 0554 055 0.507 0.480 0456 002 0.410 0.90 0.370 0352 0.335 0.319 0300 029 0275 0262 7 07000 0.665 0020580 0547053 0.432 0452 0425 0.400 0.376 0354 0.33 0.214 0295 0279 026 0249 0235 0.222 0.210 071 0677067705020540 0.502 0467 0.04 0.464 0.375 0.351 0.327 0305 0205 0.266 0249 022 021 02040191 0129 0950 9 070105450592 0544 0.500 0.460 0424 0091 0.361 0333 0.308 0.284 0.250 0.20 0.225 0.209 0:194 0190 0367 0155 014004 10 0.57006540550 0.5000463 0.422 0.336 0352 0.32 0.295 0270 0247 0227 0208 0191 0176 0162 0349 0137 0.126 0.118 2.307 11 0.650 0505 052 0.05 0.429 0.388 0350 0.37 0.287 0.261 0237 0.215019501790162 050 0005 01230112 0303 0.0940085 0625055704920444 0.397 0.356 0.319 0280 0257 0231 0208 0187 0168 0152017 0124 0.12 0.002 0.092 033 0075 0.069 05010530 0.400 0.45 0.368 0.326 0.290 0.258 0229 0204 0182 0163 0.1450000 0176 0104 0090 0.034 0.075 0.068 0001 0055 05770505 04420385 0.340 0.299 0.263 0232 0205 0.181 0 160 0541 0125 0.111 0.099 0000 0.078 0.069 0.062 0.055 0.049 0044 15 0.555 0401 0352 0.315 0275 0239 0.209 0183 0.1600500123 01000095 0004 0.074 0065 0057 0.051 0.045 0.0400005 10 0534 0.45 0.34 0.339 0292 0252 0218 OSS 0.163 0341 01230107 0.098 0.001 0.07 0.002 0.054 0047 0012 0096 0002 0028 050 0.00 0.37 0312 0.2700231 0198 0170 0546 0125 000 0090 0.00 0.069 0.060.0052 0045 0.039 0.034 0.030 0.025 0.023 1 0.940.450.500.290 0.250 0212 0.1500153 0130 0:11 0.095 0.001 0.069 0050 051 0.04 0.033 0.032 0.028 0.024 0.021 009 19 0.4750396 0.31 0.277 0232 0194 0164 0.33 0.116 0.098 0.003 0.070 0.000 0051009 0.037 0.001 0.027 0023 0.020 000 0.014 20 0456 077 0.12 0258 02150098 0.549 01240104 0.007 0.073 0001 0051 0.00 0.037 0.001 0.026 0022 0.0190.09 0.010012 21 0090359 0.294 0.2420199 0564 0.05 01120093 0077 0064 0.053 004 0.037 0.001 0.025 0.022 0.01 0.015 000 001 0.000 22 00203420273 0.226 01540150 01230.101 0.003 0.068 0.056 0046 0.030 0.032 0.025 0.022 0.01 0.015 000 0.0 0.00 0.007 040503200262 02110170008 0.10 0.091 0.074 0.000 0.049 0.040 0033 0.027 0022 0.01 0.015 0.0120.000 0.000 0.007 0.006 24 0.30 03100200197 01580126 0102 0.002 0.005 0.053 000 0.035 0.025 0.023 0.019 0.015 0.00 0.0100000 0.007 0.006 0.005 25 0375 0295 02330354080116 0.092 0.014 0.059 0047 0033 0.030 0.024 0.020 0.016 0013 0.0100009 0.002 0.000 0.00 0.004 20 031020102200172 013501000004 0.006 0053 0.042 003 0026 0.021 000 0.014 0011 0009 0.007 0.005 0.005 0.00 0.000 22 030020302070301 0.05 0090 0.075 0060 000 0037 0.029 0023 001 001 0.01 0.009 0.007 0.006 2005 2004 2003 0.002 20 0902550 0.150 ond 0000 0.00 0.054 00420033 0026 0020 0.016 0012 0.010 0000 0.000 0.005 0.004 0000 0.002 0.002 29 0301020 010501 0107 0002 000 000 000 0029 0.072 0.017 001001 0000 0000 0005 0.001 0.003 0.002 0.0000002 30 03030.2004 010099 007 0.057 004 003 0.025 0.020 0,015 0012 0.003 0.007 0.005 0000 0000 0000 0002 0.002 0.001 02030300097 0.067 006 0032002200150011 0.008 0.005 0004 0.003 0.002 0.001 00010001 0.000 0.000 0000 0000 0000 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Reg 3 Reg 4 Reg 5 Req 6A Reg 6B Calculate the internal rate of return for each product. (Round your percentage answers to 1 decimal place i.e. 0.123 should be considered as 12.3%) Product A nemate ofretum Product B 3,5 5.3% Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req1 Reg 2 Req3 Req 4 Req5 Req 6A Reg 68 Calculate the simple rate of return for each product. (Round your percentage answers to 1 decimal place i.e. 0.123 should be considered as 12.3%.) Simple rate of return Product A 36.8 % Product B (0.3) %

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