Please show work so I can see how the problem is worked out. Thank you!
Product A Product B $ 340,000 $ 525,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 380,000 $ 172,000 $ 68,000 $ 83,000 $ 480,000 $ 225,000 $ 105,000 $ 66,000 The company's discount rate is 17%. Click here to view Exhibit 13B-1 and Exhibit 13B-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: Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg 3 Req 4 Req 5 Reg 6A Req 6B Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product A Product B 2.78 years Payback period 2.75 years Req 1 Reg 2 Req 3 Req 4 Req 5 Req 6A Req 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. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 6B For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period Internal Rate Simple Rate of of Return Return Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req3 Req 4 Req 5 Req 6A Req 6B Calculate the project profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Project profitability index Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req3 Req 4 Req 5 Req 6A Req 6B Calculate the project profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Project profitability index Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Reg 3 Req 4 Req 5 Req 6A Req 6B Calculate the simple rate of return for each product. (Round your answers to 1 decimal place i.e. 0.123 should be considered as 12.3%.) Product A Product B Simple rate of return % % Req4 Req 6A > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3 Req 4 Req 5 Req 6A Req 6B For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period Internal Rate Simple Rate of of Return Return Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 Req 4 Req 5 Req 6A Req 6B Based on the simple rate of return, Lou Barlow would likely: Accept Product A Accept Product B Reject both products
