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 25% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 340,000 $ 540,000 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 $ 176,000 $ 68,000 $ 84,000 $ 490,000 $ 226,000 $ 108, eee $ 64,000 The company's discount rate is 18% Click here to view Exhibit 148.1 and Exhibit 14B 2 to determine the appropriate discount factor using tables res 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 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Reg1 Req2 Reg 3 Reg4 Req5 Reg 6 Reg 60 Calculate the net present value for each product. (Round your final answers to the nearest whole dollar amount.) Product A Products Net present Value 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 25% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product Products Initial investment: Cost of equipment (zero salvage value) $ 140,000 $540,000 Annual revenues and costs: Sales revenues $ 390,000 $ 490,000 Variable expenses $ 170,000 5 226,000 Depreciation expense $ 68,000 $100,000 Fixed out-of-pocket operating costs 584,000 564,000 The company's discount rate is 18% Click here to view Exhibit 148.1 and Exhibit 1482. 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 60. For each measure, identify whether Product A or Product is preferred 65 Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Reg Req R4 Reqs Reg 6 Ciculate the internal rate of return for each product. (Round your percentage ariswers to 1 decimal placete: 0.123 should be considered as 12 Product A Products inte ofreu 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 (RON, which has exceeded 25% each of the lost three years. He has computed the cost and revenue estimates for each product as follows: Product Product $ 340,000 $540,000 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 $ 176,000 $68,000 $ 34,000 5 490,000 $ 226,000 $ 108,000 $ 64,000 The company's discount rate is 18% Click here to view Exhibit 14B1 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 accept? - Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg Reg4 Regs Reg 6 Regou Calculate the profitability index for each product. (Round your answers to 2 decimal places) Product Product B Profitability index 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 25% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Producto $ 140,000 $ 540,000 Initial investments Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 390,000 5 176,000 $ 68,000 $ 84,000 5 400,000 $ 226,000 $ 100,000 564,000 The company's discount rate is 18% Click here to view Exhibit 148.1 and Exhibit 148.2. 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 60 For each measure, Identity whether Product A or Product is preferred 6b Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Hog: Mana? Hea Reg 4 Reg RAG BA Regu Calculate the simple rate of return for each product. (Round your percentage answers to 1 decimal place 0.123 should be considered as 1234) Product Products Sample rate of relum Lou Barlow, a divisional manager for Sage Company has an opportunity to manufacture and sell one of two new products for a live year period His annual pay raises are determined by his division's return on investment (ROI), which has exceeded 25% each of the last three years. He has computed the cost and revenue estimates for each product as follows Product A Product $ 340,000 $540,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs Sales revens Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 390,000 5 176,000 5 68,000 $ 84,000 $ 490,000 $ 226,000 $100,000 564.000 The company's discount rate is 18% Cuck here to view Exhibit 148.1 and Ext:14B2 to determine the appropriate discount factor using tables Required: 1. Calculate the payback period for each product 2. Calculate the not 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 60. For each measure identify whether Product A or Product is preferred 66. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Reg Reg2 Reg Reg4 Ro5 Red A Reg 68 For each measure, identify whether Product A or Product is preferred Net Present Value Profitability Index Paybach Period Internal Rate Simple Rate of of Return Return
