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 22% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product Product 3 $ 350,000 $ 550,000 Initial investment Cost of equipment (zero salvage value) Annual revenues and costs Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $390.000 $ 178.000 $ 70,000 $ 27.000 $470.000 $ 210.000 $ 110,000 $67.000 The company's discount rate is 20% Click here to view Exhibit 138.1 and Exhibit 138 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: Complete this question by entering your answers in the tabs below. 1. Calculate the paypack 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 Complete this question by entering your answers in the tabs below. Reg 1 Req2 Reg 3 Reg 4 Reg 5 Req 6A Req 6B Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product B Product A years Payback period Saved 1. Calculate the payback period for eacn 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: Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req3 Reg 4 Req 5 Req 6A Req 6B Calculate the net present value for each product. (Round your final answers to the nearest whole dollar amount.) Product Product B Net present value 4 1. Calculate tne payback period for eacn 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 -Book Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6A Reg 6B Calculate the project profitability Index for each product. (Round your answers to 2 decimal places.) Product Product Project profitability index Reg 3 1. Calculate the payback period for eacn 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: eBook Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Reg 4 Reg 5 Req 6A Req 6B Calculate the simple rate of return for each product. (Round your answers to 1 decimal place le. 0.123 should be considere as 12.3%.) Product A Product B Simple rate of return 1. Calculate tne paypack period for eacn 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: Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Reg 4 Req5 Req 6A Reg 6B For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period Internal Rate Simple Rate of of Return Return 1. Calculate the payback period for each proauct. 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 eBook Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Req 4 Reg 5 Reg 6A Reg 6B Based on the simple rate of return, Lou Barlow would likely: O Accept Product A Accept Product B Reject both products
