Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five- wear period. His annual pay raises are determined by his division's return on investment (ROI), which has exceeded 25% each of the ast 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 $ 108,000 $ 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, 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? Calculate the internal rate of return for each product. (Round your percentage answers to 1 decimal place i.e. 0.123 s considered as 12.3%.) Product A Product B % % Intemal rate of return Calculate the profitability index for each product. (Round your answers to 2 decimal places.) Product Product Profitability Index EXHIBIT 140-2 Pretant Value of an Annuity of Sin Arreart VI 2 U 709 Periods 45 5% 7 8% 9 90% 12 141 12 To 193 20% 254 1 09620952090 0.935 0.926 0.90 0909 0.90 0.80 0.895 0.77 0.870 08620055 0.347 0.540 0.833 0826 0.020000006 0.800 1886 1859 1853 1808 17 1759 1736 13 1690 1660 1617 1626 1005 150515661547 1520 1509 1492 1474 1457 140 3 2.775 2723 2670 2.5712531 2.487 2444 2402 231 2322 2203 2246 2.210 2114 2140 2105 2014 2012 2011 1981 1952 4 3630 2546 3465 3:37 2240 2170 7102 3037 2.974 2.914 2655 2790 270 2800 2839 2.539 2.540 2.491 2440 2.404 2302 4.152 4.20 4300 3.997 2090 2791 2.696 1605 1507 3.43 3.7523274 21993127 2058 2.991 2.926 2864 2.003 2745 2689 6 5.242 5,076 490 16234000 43554231 41 2.991 2009 3.75436852500 1,490 3.41 3.320 1345 31673092 3020 2951 7 6.002 5.502 5.389 5.200 5.033 4.868 4712 45 4423 4210 4550 40092922 3.812 3706 16053508 3.4153327 32422161 6733 64676210 5.971 570 5.535 5305 5145496847994609 4.187 4344 4207 20783954 3.07 3.726 3619 3518 3421 3329 9 7435 2108 6.0026.515 5207 5.995 57595.537 5328 5132 4.546 4772 4607 4451 4300 4163 4031 3.905 3706367335662463 10 8.511 2722 7350 2024 6710 6478 5145 5.895.650 5.426 5 216 5019 433 4659 449443394192 4054 3.923 3.7993682 3571 8.700 3067887 7499 6.305 6.4956207 6930 5.6875453 5.234 5029 48964656 4435 4327 4377 4035 3.902 376 3650 12 9.395 1.362 3.384 7903 7536 7151 68 6.452 6194 918 5.60 5.421 5197 498 4793461 4.09 421 41273.96535513725 9.988 9.394 8.850 350 2904 7487 2103 6.750 6.04 6.122 5.342 5.583 5.2 5.1184.910 475 4533 434203406330123700 14 105639.000 9.295 375 7.786 23676902 6.628 0.302 6002 57245.460 5220 5000 43024.01 402 426545033962 3524 15 1110 10 380972 9.900 8.550 8.000 7606 71916.01 6.612 6102512425525 5224 5092 884575 44 715 4.001 305 75 1852 10 080106 9447 0.30 7020 73790.94 6.604 6205 59545608 5.05 516249384730 4530 457 41940323507 2.5061274 10.77 9703 9.122 3544 1.022 759 2120 67296m 6047 530 5475 5222 4990 47754576 4.791 4219 40503910 13 12.050 11600 10.028 10.0509:372 56 201 2702 7.250 640 6467 6126 5.05534 5.2735.0031246084419 4243 000 3.28 10 134 12.085 1058 10336 9601 950 83657839 7300 6935 6.550.6998575.584 1165.070 4340 4.53544124253 4097 3942 20 13500 12:42 11.00 10.594 9.618 9029 3.5917963 7.4097025 6.623 62995929 5628535101 40 4657 40427940 2954 21 4029 12.621 11754 90.006 100179292 3,649 075750222 6.687 6312 597 5.0655154502 1991 405 406 42924121 3003 22 11.0513 12042 1061 10.2019:42 1.772 118 7645 2170 615 615 601 5096 5410 559 4900 4000 4400 4302001970 23 54957 11.409 12.30311272 10.371 9500 IS206 27 2230 0.7926790 6044 57235432 5167 1905 1903 190431 47 970 24 15.217 3.79912650 149 10.529 9707 9053775472806.35 604 60735746 5.451 5082 940 4.507 418 413 2081 25 15622094 270111654 100750823 9.077 142270 7710 6 664 0975766 54675195 4721 455 4.323 473595 15.983 14375010032600929 9:15147006 7372 606 616 57805480 5.200495647284520 4320 451 300 27 10.30 1421 mo 10:035 90027923785607903 7409 6.935 651461365795.492525 964 4734 4524 439241543990 20 5.681 1604051202 7105110110 93078.02 7904741 6.01 6534 6152 5810 5.502 522349707945284154573992 29 16994 15941 12501 12.278 11:50 10198 9:30 3850 302 7470 6.933 6.55501665.820 5510 52299754 353374150994 19.292 15372 3705 2.400 1.250 1027 9.437 0643055 7400 700 566 67 53095517 529 294645343300 3095 40 19.293 7150 504533321925 757979 8561344765474202203071555258 9 470015440463090 DOBIT 140-1 Procent Value of the SU NE NO Periods 3% 0% 7 BS 91 10% 12 17 19 20 21 1 0982 0952090 0.935 0.926 0.90 0.909 0.901 0390 0.885 0.8770870 0.862 0.855 0.17 0.840 08:30 0826 0820001 0.001 0.800 22 23 24 2 0.925 0.907 0.890 0.873 0857 0842 0826 0.812 0.797 0.783 0709 0.756 0743 0.731 078 0706 0094 068 06720661 0650 0610 0.889 0364 0.840 0.03 0.794 0772 0.751 0.731 0.7120693 0.675 0658 064 0.024 0.000 0.593 05790564 0551 0537 0.524 0.512 4 0.156 0823 0.7920763 07350708 0681 0.659 0.636 0.61 0.592 0.572 0552 0.534 0560499 0.002 0.467 0.451 0.07 0.423 0.450 5 0322 0.784 0347 0.73 0.600.650 0.021 0.593 0.587 0.53 0.519 0.497 0.476 0.456 0.407 0.41 0.0020386 0370 0.355 0.3110378 0790 0746 0705 0666 0630 0596 0564 0535 0507 0.490 0.156. 0132 0.43 0390 0.370 0.352 0335 0719 0303 0209 027 0262 7 0.760 071 0.005 0.623 0583 0547 050 04820452 0425 0.400 037 0354 0333 0.3 0.296 0279 0203 0249 0235 0222 0210 0731 0.677 0.627 0582 0540 0502 0.467 0.434 0.004 0.376 0351 0.327 0.305 0205 0.266 0249 0233 0218 0.2040191 01191 0.70 0.64505920544 0.500 0100 0424 0.391 0.361 0.3 0.308 0284 0.263 0.20 0.225 0209 0.104 00007015 10 04 04 0.676 00140558 0.500 0.463 0422 0.306 0352 0322 0295 02700247 0227 0200 0.191 02 00370126 0110 010 11 0.650 0.50 0.527 0,475 0.429 038 0350 000 0207 0201 0237 0215095017800035 0.03 0102 010 0004 0000 12 0625 0551 0.497 0.44 0397 0356 0.3 0.206 0.257 028 0201 0107 016 0152 017 0124 0112 0002 0.092 008 0.0% 0.000 0.001 0.530 0004 0.368 0.326 0290 0.250 0.229 0204 om 0363 01 000 0.116 0104 0000 0004 0.075 0.068 000 000 4 057 0505 6412039 0340299 0203 0232 0.205 011 WA 01410125 011 0.00 0.00 0.00 0.000 0.002 0055 0019 0044 15 0555 0,231 0.417 0.32 0.3150275 0.20 0.209 010 0100000123 010 0005 0.08 0.04 0.005 0.57 0.051 0045 000 0005 16 0534 0158 0.394 0399 0297 0.752 021 0030141020807 000 0001 007 0062 0054 001 0002 003 000 000 17 0.50 0.40 0.37 0.31 0.270 022 0199 010 0005 000 000 0000 0000 0000 002 0015 0.000034 0.000 0.026 0.023 18 0.464 0416 0.250 0295 0.250 0.20 0.1500153 000 00095 0961 0000 000051 Do 0000 0002 0.021 0034 0.001001 19 0.475 0.396 0311 027 0232 0194 OM 0 0 0090 0000 000 0000 0051 000 0.007 008 0027 000 000 0017004 20 0.58 0.03120256 025 0170990140104 0002 0073 0001 005 000 000 000 0026 0022 0.01 0.000000 21 0.09 0.3580294 0242 0.190 0164 005010 0003 007 0064 005 004 003 000 0026 0022 0.00 0.00 0.00 0.000 0422 0.342 0.278 0226 0940150 000 0000 000 0056 0.046 003 0032 0.025 0.022 000 000 000 000 0000 0.007 0.400 0.20 0.22 0.21101700138 012 0.00100140000 0049 0040 0033 002 0.033 000 000 000 0000 0000 002 0.000 24 0390 0.10024209910158 006 002 002 0.006 000 000 0005 0020 002 001 0015 000 0000 0000 000 0000 000 25 0.375 0.295 02330184 0140 0110092 0076 0050 0047 0.0000300024 0.020 00 000 0.000 0.000 0.00 0.000 0.00 0.0 26 0301020102200172 005 0300 0,004 0.066 0.053 0042 000 0026 0021 0.01 0.01 0.01 0.000 0.007 0.000 0.0050004 0.003 27 0.347 020 0.207 0961 005 0.000 0.076 0.000 00470037 0029 0022 0.0100011 000 000 0.00 0.00 0.00 0.00 0.00 0.002 26 03330255016 0.150 Ono 0090 0.000 0.054 0042 0030 0.026 0.020 000 000 000 000 0000 0005 0.004 000 0002 000 29 03102430115 041 0.002 003 004 003 0029 0.0222 001 CON 0011 0000 0.00 0.00 0.00 0.00 0.00 0.00 0.003 30 1 022 0176 0:01 0 0.075 0.05700400000020001500000000000000000000000000000000 40 02000200 000 000 0002 0022 0.015001 000 0005 0.004 000 000 000 000 000 0.0000000000000000000 COCO