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 21% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B Initial investment: Cost of equipment (zero salvage value) $ 270,eee $ 480,eee Annual revenues and costs: Sales revenues $ 320,000 $ 420, eee Variable expenses $ 148,eee $ 198,000 Depreciation expense $ 54,eee $ 96,000 Fixed out-of-pocket operating costs $ 77,eee $ 57, eee The company's discount rate is 19%. Click here to view Exhibit 12B-1 and Exhibit 12B-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: Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6A Reg 68 Calculate the project profitability index for each product. (Round your answers to 2 decimal places.) Product A Product Project profitability index 1.10 1.05 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 21% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 270, eee $ 480, eee Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 320, eee $ 148, eee $ 54,000 $ 77, ege $ 420,eee $ 198, eee $ 96, eee $ 57, eee The company's discount rate is 19% Click here to view Exhibit 12B-1 and Exhibit 12B-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: Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg 3 Req 4 Rajas Req 6A Req 6B Calculate the simple rate of return for each product. (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.) Product B Simple rate of return Product A % % 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 21% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 270,000 $ 480,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 320,000 $ 148,eee $ 54,000 $ 77,eee $ 420,eee $ 198,000 $ 96,000 $ 57,000 The company's discount rate is 19% Click here to view Exhibit 128-1 and Exhibit 12B-2. to determine the approp te 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 Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Reg 4 Reg 5 Read Reg 68 For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period Internal Rate of Return Simple Rate of Return 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 21% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 270, eee $ 480,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 320,000 $ 148,080 $ 54,000 $ 77,000 $ 420,000 $ 199,00 $ 96,000 $ 57,000 The company's discount rate is 19% Click here to view Exhibit 128.1 and Exhibit 128-2. 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. 6bBased on the simple rate of return, Lou Barlow would likely Answer is not complete Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6A Reash Based on the simple rate of return, Lou Barlow would likely: Accept Product A Accept Product B Reject both products
