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Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sei one of two new products for a five. year period.
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sei one of two new products for a five. year period. His annual pay raises are determined by his division's return on investment (RO)), which has exceeded 21% each of the last three years. He has computed the cost and revenue estimatos for each product as follows: The company's discount rate is 1996 . Click here to view and Fxhibit 128.2. to determine the appropriate discount factor using tables. Required: 1. Caiculate the payback period for each product. 2. Caiculate 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 raye of return, which of the two products should Lou's division accept
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