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Lou Barlow, a divisional manager for Sage Company, has an opportunlty to manufacture and sell one of two new products for a fiveyear perlod. His
Lou Barlow, a divisional manager for Sage Company, has an opportunlty to manufacture and sell one of two new products for a fiveyear perlod. His annual pay ralses are determined by his division's return on investment (ROl). which has exceeded 20% each of the last three years. He computed the following cost and revenue estlmates for each product: The company's discount rate is 18% Click here to view and to determine the approprlate discount factor(s) using tables. Required: 1. Calculate each product's payback period. 2 Calculate each product's net present value. 3. Calculate each product's internal rate of return. 4. Calculate each product's profitability Index. 5. Calculate each product's simple rate of return. 6a. For each measure, Identlfy whether Product A or Product B is preferred. 6b. Based on the simple rate of return, which of the two products should Lou's dlvislon accept
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