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Lou Barlow, a divisional manager for Sage Compary, has an opportunity to manufacture and sell one of two new products for a five. year period.
Lou Barlow, a divisional manager for Sage Compary, has an opportunity to manufacture and sell one of two new products for a five. year period. His annual pay ralses are determined by his division's retum on investment (RO). which has exceeded 23% each of the last three years. He has computed the cost and revenue estimates for each product as follows: The company's discount rate is 18% Click here to vlew Exhibit 148 1 and Exabib 148.2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period for each product. 2. Calculate the riet present value for each product. 3. Calculate the internal rate of retuin for each product. 4. Calculate the profitability index for each product. 5. Caiculate the simple rate of retum for each product. 6a. For each measure, identify whether Product A or Prodott B is preferred 66. Based on the simple rate of retum, which of the two products should Lou's division accept
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