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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. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 370,000 $530,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 480, Bee $ 180,eee $ 74,880 $ 85, eee $ 510,000 $ 250, eee $ 106,080 $ 72,80 The company's discount rate is 19%. Click here to view Exhibit 14B-1 and Exhibit 14B-2. to determine the appropriate discount factor using tables. This is a great review problem that reinforces the Individual concepts covered using a comprehensive example. To answer the questions, you must first calculate the annual net cash Inflows as follows: Sales revenue minus variable expenses minus fixed out-of-pocket operating costs. Then you will calculate the following: payback perlod (even flows), net present value (NPV). Internal rate of return (IRR) and profitabillty Index. 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. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product B Product A years Payback period years (Reg 1 Reg 2 >

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