Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please include math! Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a

image text in transcribed
image text in transcribed
please include math!
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 23% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 390,000 $ 585,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 420,000 $ 185,000 $ 78,000 $ 90,000 $ 500,000 $ 222,000 $ 117,000 $ 70,000 The company's discount rate is 21%. Calculate the internal rate of return for each product. (Round your answers to 1 decimal place i.e as 12.3%.) Product Product

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

=+What is your personal mission statement?

Answered: 1 week ago