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 21% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product Products $ 210,000 $ 420,000 Initial investment Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Pixed out-of-pocket operating costs $ 290,000 $ 138,000 $ 42,000 $ 74,000 $ 390,000 $ 186,000 $ 84,000 $ 54,000 The company's discount rate is 19%. Click here to view Exhibit 138-1 and Exhibit 13B-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 project 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, Lou Barlow would likely: EXHIBIT 130 Prentals of St. 15% Periods 45 6 7 9% TON 11% 1213% 10% 17% 18 19 20 21 22 1 23 24 25 0.962 0.952 0.943 0.035 0.926 0917 0.000 0.901 0893 0.385 0.77 0.870 0362 0.855 0.347 0.840 0.833 0.026 08200013 0106 0000 2 0.925 0.907 0.890 0.873 0,857 0,342 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.7180.706 0.694 0.003 0.672 0.061 0.650 0.610 0.889 0.864 0.340 0.816 0.794 0.772 0.751 0.731 0.712 0,693 0.675 0.65 0.641 0.624 0.000 0.593 0579 0.564 0551 0.537 0.524 0.512 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0534 0.516 0.400 0.482 0.467 0,451 0.437 0.423 0.410 5 0.822 0.784 0.747 0.713 0681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0419 0.402 0.386 0.370 0.355 0.341 0.328 5 0.790 0.746 0.705 0.666 0.630 0.506 0.564 0.535 0.507 0.40 0.456 0432 0 410 0.390 0.370 0.352 0.335 0.310 0.303 0.280 0.375 0.262 7 0.760 0.711 0.665 0.623 0.583 0547 0.513 0482 0.452 0425 0.400 0376 0.354 0333 0314 0.296 0.279 0263 0.249 0.235 0.222 0.210 8 0.731 0.677 0.627 0582 0.540 0.502 0.467 0.434 0,404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233 0218 0 204 0.191 0.179 0.158 9 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0 361 0333 0308 0 284 0.263 0243 0.225 0.209 0194 0180 0.157 0.155 0.144 0.134 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0 352 0322 0.295 0270 0247 0.227 0.20 0.191 0.176 0.162 0.149 0.137 0.125 0.116 0.107 11 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.17 0.162 0.148 0.135 0.123 0.112 0.103 0.094 0.006 12 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0 231 0.208 0.187 0.168 0.152 0.137 0.124 0 112 0.102 0.092 0083 0.076 0.060 13 0.601 0.530 0.469 0.415 0.368 0.326 0 290 0.258 0229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.084 0.075 0068 0.061 0055 14 0.577 0.505 0.442 0,388 0.340 0.299 0.263 0232 0.205 0181 0.160 0.141 0.125 0.111 0.099 0088 0.078 0,069 0.062 0.055 0.049 0.044 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0 123 0.108 0.095 0.084 0074 0.065 0,057 0051 0.045 0.040 0.035 16 0.534 0.458 0,394 0.339 0.292 0.252 0218 0.188 0.163 0.141 0.123 0.107 0.003 0.081 0.07 0.062 0054 0.047 0.042 0.036 0.032 0.028 17 0.513 0.436 0.371 0.317 0.290 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.00 0.00 0.060 0,052 0.045 0.039 0.034 0030 0.025 0.023 0.494 0.416 0.350 0.296 0.250 0212 0.180 0.153 0.130 0.111 0.005 0.081 0.069 0.059 0051 0044 0038 0.032 0,028 0.024 0.021 0.018 19 0.475 0.396 0.331 0.277 0.232 0.194 0 164 0138 0.116 0.098 0.083 0.070 0 060 0.051 0.043 0.037 0.031 0.027 0.023 0.020 0017 0.014 20 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0124 0.104 0.087 0.073 0.051 0.051 0.043 0.037 0.031 0.025 0.022 0.019 0.016 0.014 0.012 21 0.439 0.359 0.294 0.242 0.199 0.164 0.135 0.112 0.093 0077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0.018 0.015 0.013 0.011 0.000 22 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0038 0.032 0.026 0.022 0018 0.015 0.013 0011 0.009 0.007 23 0.406 0.326 0.262 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.049 0.040 0033 0.027 0.022 0.018 0,015 0,012 0010 0.009 0.007 0.006 24 0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.002 0.056 0053 0.043 0.035 0.028 0.023 0.019 0015 0.013 0.010 0.000 0.007 0.005 0.005 25 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.009 0.007 0.005 0.005 0.004 26 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.025 0.021 0.017 0.014 0.011 0.000 0.007 0.006 0.005 0.004 0.003 27 0.347 0.268 0.207 0.161 0.125 0.09B 0.076 0.060 0.047 0.037 0.029 0.023 0.018 0.014 0.011 0.009 0.007 0.005 0.005 0.004 0.003 0.002 28 0.333 0.255 0.196 0.150 0.116 0.090 0.069 0.054 0.042 0.033 0.025 0.020 0.016 0012 0.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0 321 0.243 0.185 0.141 0.107 0.082 0.063 0048 0.037 0.029 0,022 0.017 0.014 0.011 0.008 0.005 0.005 0004 0.003 0.002 0.002 0.002 30 0 308 0.231 0.174 0.131 0.099 0.075 0,057 0044 0.033 0.026 0.020 0015 0.012 0.000 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 40 0208 0.142 0097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 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 133-2 Present Value of an Annuity of $1 in Artears: (1+ Poriods 44 1 2 2 4 5 6 7 8 9 10 11 12 13 14 15 5% 75 8% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0,862 0.855 0 847 0.840 0.833 0826 0.020 0.813 0.806 0.800 1.886 1.859 1833 1808 1.783 1759 1.736 1.713 1.690 1668 1647 1626 1605 1585 1566 1547 1,528 1.500 1.492 1474 1.457 1.440 2.775 2.723 2673 2624 2.577 2.531 2487 2444 2.402 2361 2322 2283 2246 2210 2174 2.140 2 106 2074 2042 2011 1.981 1952 3.6303,546 3.4653387 3312 3.240 3.170 3 102 3037 2974 2914 2855 2.798 2743 2.690 2,639 2589 2.540 2494 2448 2404 2.362 4.452 4.329 4212 4.100 3.993 3.890 3.791 3.696 3.605 3517 3.433 3.352 3.274 3.199 3.127 3.058 2091 2.926 2.864 2.803 2.745 2.689 5.242 5,076 4.917 4.767 4.623 4.486 4355 4 231 4.111 3.998 3889 3.784 3.685 3589 3.498 3.410 3.326 3.245 3.167 3.092 3.020 2951 6.002 5.786 5,582 5.389 5.206 5,033 4,868 4712 4,564 4423 4288 4160 4,039 3922 3.812 3.706 3.605 3.500 3.416 3.327 3242 3.161 6.733 6.463 6.210 5.971 5.747 5.535 5335 5.146 4.968 4790 4639 4.487 4344 4 207 4078 3.954 3.837 3.726 3.610 3.518 3421 3.329 7.435 7.108 6.802 6515 6.247 5.995 5.759 5.537 5.328 5.132 49464772 4602 4451 4303 4 163 4031 3905 3.786 3.673 3.566 3.463 8.111 7.722 7.360 7024 6.710 6.418 6.145 5.889 5.650 5.426 5.216 5019 4833 4659 4494 4339 4,192 4054 3.923 3.799 3.682 3571 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.202 5.938 5,687 5.453 5.234 5.029 4836 4,656 4.485 4327 4.177 4.035 3.902 3.776 3.656 9.385 8.863 384 7943 7536 7.161 6,814 6.492 6.194 5.918 5660 5421 5.197 4988 4793 4611 4.439 4278 4.127 3.985 3.051 2725 9.986 9.394 8.853 8.358 7904 7487 7.103 6.750 6.424 6.122 5842 5583 5.342 5.118 4910 4715 4.533 4 362 4 203 4053 3.912 3780 10.563 9,899 9.295 8.745 8.244 7.786 7.367 6982 6 628 6.302 6002 5724 5.468 5229 5.008 4802 4,611 4.432 4265 4.108 3.962 3.824 11.118 10.380 9.712 9.108 8.559 8,061 7.606 7.191 6.811 6.462 6.142 58475.575 5 324 5.092 4.876 4.675 4489 4.315 4.153 4001 3.859 11652 10.838 10.106 9.447 8.851 8.313 7824 7379 6974 6 604.6265 5 954 5.668 5 405 5.162 4 938 4.730 4536 4357 4.189 4033 3.887 12.166 11 274 10.477 9.763 9.122 8.544 3.022 7.549 7.120 6.729 6.373 6047 5749 5.425 5.222 4.990 4.775 4576 4391 4.219 4059 3910 12659 11.690 10.828 10.059 9.372 8.756 3.201 7.702 7.250 6840 6.467 6.128 5818 5534 5.273 5.033 4.812 4.608 4.419 4.243 4.050 3928 13.134 12.065 11.158 10 336 9.604 8.950 8.365 7839 7366 6.938 6550 6.198 5877 5584 5.316 5.070 4.843 4.635 4.442 4.263 4.097 3942 13590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7.469 7.025 6623 6.259 5 929 5.628 5.353 5.101 4.870 4657 4.460 4.279 4.110 3.954 14.029 12.821 11.764 10.836 10.017 9.292 8.649 8,075 7562 7.102 6,687 6312 5.973 5,665 5.384 5.127 4.891 4675 4.476 4.292 4.121 3.963 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8. 1767645 7.170 6.743 6 359 6011 5,696 5.410 5.149 4.909 4.690 4.488 4.302 4.130 3.970 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8 266 7718 7.230 6.792 6 399 6,044 5.723 5.432 5.167 4.925 4.703 4.499 4311 4.137 2.976 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 6835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4507 4.318 4.143 3.981 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.721 4514 4.323 4.147 3.985 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8.488 7.896 7372 6.906 6.491 6.118 5.783 5.480 5.206 4 956 4.728 4.520 4 328 4.151 3988 16.330 14.643 13.211 11.987 10 935 10.027 9237 8.548 7.943 7.409 6.935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4332 4.154 3.990 16,663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7984 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 4 335 4.157 3.992 16.984 15.141 13.591 12.278 11.158 10.1989 370 8.650 8.022 7.470 6.983 6.551 6.166 5.820 5.510 5229 4975 4.743 4531 4.337 4.159 3.994 17.292 15.372 13.765 12.409 11.258 10.274 9.427 3.694 8.055 7.496 7.003 6.566 6.177 5.829 5517 5.235 4979 4.746 4.534 4339 4.160 2.995 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6 642 6233 5.871 5548 5.258 4 997 4.760 4544 4.347 4.166 3999 16 17 18 19 20 21 22 23 24 25 26 27 28 20 30 40