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Please answer all requirements for a thumbs up thankyou! Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one
Please answer all requirements for a thumbs up thankyou!
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 retum on investment (ROI), which has exceeded 17% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 180,000 $ 390,000 Initial Investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 260,000 5 124,000 $36,000 $ 71,00 $360,000 $ 174,000 5 78.000 5 50,000 The company's discount rate is 15%, Click here to view Exhibit 148-1 and Exhibir. 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. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Reg 4 Reg 6 Reg 2 Reg 5 Reg 6B Reg 1 Req3 Calculate the payback period for each product. (Round your answers to 2 decimal places) Product A Product B years years Payback period Reg 2 ) Complete this question by entering your answers in the tabs below. Reg 1 Relea Reg 3 Reg 4 Reg 5 Reg 6 Reg 6B Calculate the net present value for each product. (Round your final answers to the nearest whole dollar amount.) Product A Product B Net present value Complete this question by entering your answers in the tabs below. Reg 3 Regang Reg 5 Reg 6A Reg 68 Req1 Reg 2 Calculate the internal rate of return for each product. (Round your percentage answers to 1 decimal place le 0.123 should considered as 12.3%) Product A Product B Internal rate of return * Req2 Reg 4 > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req4 Reg 5 Reg 6A Reg 68 Calculate the profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Profitability Index Complete this question by entering your answers in the tabs below. Reg 3 Reg 4 Reg 6 Reg 6B Req: Reg 2 Reqs Calculate the simple rate of return for each product. (Round your percentage answers to 1 decimal place lo 0.123 should be considered as 12.3%) Product A Product B Simple rate of return Complete this question by entering your answers in the tabs below. Pe 1 Rea 2 Req3 Reg 4 Reg 5 Reh 6A Reg 6B For each measure identify whether Product A or Product B is preferred. Net Present Profitability Payback Internal Rate Simple Rate of Value Index Period of Return Return 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 Based on the simple rate of return, which of the two products should Lou's division accept? Accept Product A Accept Product B Reject both products Step by Step Solution
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