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 20% 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 $250,000 value) Annual revenues and costs: Sales revenues Variable expenses $ 140,000 190,000 Depreciation expense $ 39,000 $ 81,000 Fixed out-of-pocket operating $ 75,000 $55,000 costs $ 460,000 $300,000 $400,000 $ The company's discount rate is 18%. Click here to view Exhibit 138-1 and Exhibit 138-2. to determine the appropriate discount factor using tables Required: Calculate the payback period for each product. (Round your answers to 2 decimal places.) 1. Periods 49 5% 6% 796 896 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 1 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 2 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0.672 0.681 0.650 0.640 3 0.889 0.864 0.840 0.816 0.794 0.772 0.750 0.731 0.712 0.693 0.675 0.658 0.541 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0,659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 5 0,822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.587 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0.328 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0,335 0.319 0.303 0.289 0.275 0.262 7 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0.249 0.235 0.222 0.210 8 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233 0.218 0.204 0.191 0.179 0.168 9 0.703 0.545 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.134 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0270 0.247 0.227 0.208 0.191 0.176 0.162 0,149 0.137 0.125 0.116 0.107 11 0.660 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.103 0.094 0,086 12 0.625 0.567 0497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0.003 0.076 0.069 13 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.084 0.075 0.068 0.061 0.055 14 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 15 0.555 0.481 0.417 0.362 0.375 0.275 0239 0.200 0.163 0.160 0.140 0.123 0.108 0.095 0.064 0.074 0.065 0.057 0,051 0,045 0.040 0.035 16 0.534 0.458 0.394 0.329 0.292 0.252 0.218 0.18 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0,032 0,028 17 0.513 0.436 0.371 0.317 0.270 0231 0.198 0.170 0.146 0.125 0.108 0.093 0.060 0,009 0.060 0.052 0.045 0.039 0.034 0.030 0,026 0.023 18 0.494 0416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.095 0.081 0.000 0.059 0.051 0.044 0.038 0.032 0.028 0.024 0.021 0.018 19 0.475 0.396 0331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.003 0.070 0.060 0,051 0.043 0.037 0.001 0.027 0.023 0.020 0.017 0.014 20 0.456 0.377 0312 0.258 0.215 0.178 0.149 0.124 0.104 0,087 0,073 0.061 0.051 0.043 0.037 0.031 0.026 0,022 0.019 0,016 0.014 0.012 21 0.439 0.359 0.294 0 242 0.199 0.154 0.135 0.112 0.093 0.077 0.054 0.053 0.044 0.037 0.031 0.025 0.022 22 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.058 0.056 0.046 0.038 0.032 0.026 0.002 0.018 & 0.01 13 0.01 0.009 23 0.406 0.326 0.262 0211 070 0.138 0.112 0.001 0.0174 0.060 0.049 0.040 0.33 0.027 0.022 0.018 0.015 0,010 0.00 0.007 0.006 15 0.01.1011 0.006 0007 24 0.390 0310 0247 0.197 0.158 0.126 0.102 0.002 0.066 0.053 0.043 0.035 0.028 0.003 0.019 0.015 0.013 00.006 0.007 0.006 0.005 25 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.069 0.047 0.008 0.000 0.024 0.020 0,015 0,013 0.010 0.009 0.007 0.006 0.005 0.004 26 0.361 0281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.011 0.000 0.007 0.005 0,005 0,004 0.003 27 0.347 0.20 0.207 0.161 0.125 0.098 0.076 0.000 0.047 0.037 0.029 0.003 0.018 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.002 28 0.333 0255 0.196 0.150 0.116 0.000 0.069 0.054 0.042 0.003 0.026 0.020 0.016 0.012 0.010 0.008 0.006 0.005 0.001 0.000 0.002 0.002 29 0.321 0243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.002 0.017 0.014 0.011 0.008 0.006 0.006 0.004 0.003 0.002 0.002 0.002 30 0.308 0.237 0.174 0.131 0.099 0.075 0.057 0.044 0.035 0.025 0.020 0.015 0.012 0.009 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 40 0.208 0.142 0.097 0.067 0.046 0.002 0.022 0015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.009 m nm 0% 7% - maste - Periods 496 5% 8% 996 10% 11% 12% 13% 14% 15% 16% 1796 1896 19% 20% 2196 229 2396 2496 25% 1 0.962 0.952 0.943 0.935 0.925 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 2 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.605 1.685 1.566 1.547 1.528 1.509 1.492 1.474 1.457 1.440 3 2.775 2.723 2.673 2.024 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.246 2210 2.174 2.140 2.106 2.074 2.042 2.011 1.981 1.952 4 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 2494 2.448 2.404 2362 5 4452 4.329 4.212 4.100 3.993 3.890 3.791 3.500 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.926 2.864 2.803 2.745 2.689 5242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.245 3.167 3.092 3.020 2.951 7 6.002 5.786 5.582 5.389 5.200 5.033 4.868 4.712 4.564 4.423 4.288 4.100 4.039 3.922 3.812 3.706 3.605 3.508 3.416 3.327 3.242 3.161 B 6.733 6.463 6210 5.971 5.747 5.535 5,335 5.148 4.968 4.799 4.639 4487 4.344 4.207 4.078 3.954 3.837 3.726 3.619 3.518 3.421 3.329 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5328 5.132 4.946 4772 4.607 4.451 4.303 4.163 4.001 3.905 3.785 3.673 3.566 3.463 10 8.111 7.722 7360 7.024 6.710 6.418 6.145 5.889 5.650 5.426 6.216 5.019 4.833 4.659 4.494 4339 4.192 4,054 3.923 3.790 3.682 3.571 11 8.760 8.3067.887 7.499 7.139 6.805 6.495 6.207 5.938 5,687 5.453 5.234 5.029 4.836 4.856 4480 4327 4.177 4.005 3.902 3.776 3.656 12 9.385 8.863 8.384 7.943 7536 7461 6.814 6.492 6.194 5,918 5.660 5.421 5.197 4.968 4.793 4,611 4.439 4.278 4.127 3.985 3851 3.725 13 9.000 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 6.122 6.842 5,583 5.342 5.118 4.910 4.715 4.533 43624.203 4.053 3,912 3.780 14 10.563 9.899 9.295 8.745 8.244 7.786 7.307 6.982 6,628 6.302 6.002 5.724 5.468 5.229 5.003 4.802 4.011 4.432 4.265 4.108 3.982 3.824 11.118 10.330 9.712 9.108 8.550 8.061 7.606 7.191 6,811 6.462 6.142 5.847 5,575 5,324 5.092 4.876 4.675 4.489 4.315 4.153 4.001 3.859 13 11.052 10.830 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6,604 6.265 5.954 5.668 5.405 5.102 4.938 4.730 4.630 4.357 4.033 3:387 17 12.166 11274 10.477 9763 9.192 0.544 8.092 7.549 7.120 6729 0.373 6.047 5740 5.475 6222 4.990 4.276 76 439 12.650 11.890 10.528 10.059 9,592 3.756 3.201 7.702 7250.6.840 6.467 6.128 5.010 5.534 5.273 5.000 4.312 04.059 3.910 10 13.14 12.005 11.158 10.336 9.604 8.900 8.365 7.830 7.366 6.938 6.550 8,198 5.877 8.584 6.310 5.07048436.44424203 4.097 3.942 144194080 3.928 20 13.500 12.462 11.470 10.5049.810 0.120 6.514 7.003 7 400 7.025 0.023 6.250 5.929 5.628 5.350 5.101 4.870 4 4,400 4270 4.110.3.964 21 14.000 12.021 11.704 10.836 10.017 9.292 8.640 8.075 7.562 7.102 6.687 6.312 5.973 3.065 384 127 4.801 4.075 44704292 4.121 3.063 22 14.451 13.163 12.042 11.061 10,201 23 14.057 13.489 12.300 11.272 10.371 9.580 9.803 8.206 7.710 7.250 0.702 6.399 6.044 5.723 5.432 5.167 4.525 703 4.409 411 4.137 3.078 9.412 8.772 1.176 7.645 7.70 6.743 6.350 6,011 5,696 3.410 5.140 4.909 4.60 4488 4.302 4.130 3.970 24 15.247 13.799 12.550 11.469 10.529 9.707 8.905 8.348 7.784 7283 6.835 6.4046073 6.746 3.451 5.102 4.937 4713 4.507 4318 4.143 8.981 25 15.692 14.094 12.783 11.654 10.675 9.893 0.077 3.422 7.843 7330 6.873 8.464 8.007 5.705 5.467 5195 40404.721 4514 4.323 44 3.985 26 15.963 14375 13.000 11.826 10.810 9.929 9.161 8.438 7.896 7372 6,006 6.401 6118 5.783 5430 5.200 4.950 4.728 4.520 4,328 4.151 3.988 27 16330 14641 13.211 11 007 10:35 10.027 9.237 8.548 7.445 7400 6905 6.514 6136 5.795 5.490 5215 4964 4734 4.524 4.332 4154 3.990 28 16.663 14.898 13,405 12.137 11 051 10.116 0.307 8.602 7.954 7441 6.901 6534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 4 335 4.157 3.092 20 16.964 15.141 13.501 12278 11.15 10.198 9.370 8650 3.022 7470 6.083 6551 6.106 5.820 5.510 5229 4.975 4.743 4531 4.337 4.759 3.994 17.202 15 372 13.705 12.409 11 258 10.2749.427 8.604 8.055 7 496 7.603 6.566 6.177 5.829 5.517 5235 4979 4.7464534 4.389 4100 3.995 40 10.795 17.150 15,046 13.332 11.925 10.757 9779 8.951 8.246 7.634 7 105 6.543 623 5.371 5546 5.255 4.997 4.700 4544 4.347 4.166 3.099 RSVEGEN WISLO SMERUL Product Product A B $ 15,795 $ 24,685 Net present value 3. Calculate the internal rate of return for each product. (Round percentage answer to 1 decimal place. I.e. 0.1234 should be considered as 12.3% and Round discount factor(s) to 3 decimal places.) Answer is complete but not entirely correct. Product A Product B Internal rate of return 20.8 % 20.3 % % 4. Calculate the project profitability index for each product. (Round discount factor(s) to 3 decimal places. Round your answers to 2 decimal places.) Answer is complete and correct. Product A Product B 0.05 Project profitability index 0.06 Answer is complete and correct. Product A Product B 0.05 Project profitability index 0.06 5. Calculate the simple rate of return for each product. (Round percentage answer to 1 decimal place. I.e. 0.1234 should be considered as 12.3%.) Answer is complete but not entirely correct. Product B Simple rate of return Product A 14.0 % 13.7 % e 6a. For each measure, identify whether Product A or Product B is preferred. Answer is complete and correct. Net Present Value Product B Profitability Index Payback Period Product A Internal Rate of Return Product A Product A