Problem 12-23 Comprehensive Problem [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6]

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Check my work Problem 12-23 Comprehensive Problem (LO12-1, LO12-2, LO12-3, LO12-5, LO12-6) 20 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 18% each of the last three years. He has computed the cost and revenue estimates for each product as follows: points Skipped Product A Product B $ 170,000 $ 380,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs eBook $ 250,000 $ 120,000 $ 34,000 $ 70,000 $350,000 $ 170,000 $ 76,000 $ 50,000 Print The company's discount rate is 16%. References Click here to view Exhibit 12B-1 and Exhibit 12B-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. Reg 1 Reg 2 Reg 3 Req 4 Req 5 Req 6A Reg 6B Calculate the net present value for each product. (Round your final answers to the nearest whole dollar amount.) Product Product B Net present value EXHIBIT 12B-1 Present Value of $1; + | Periods 4% 5% 6% 7% 8% 9% 10% 11% 2% 3% 14% 15% 16% 7% 18% 19% 20% 21% 22% 23% 24% 25% 1 0962 0952 0.943 0935 0926 0917 0909 0.901 0893 0.885 087 0870 0.862 0855 0847 0840 0.833 0826 0820 0.83 0806 0800 2 0.925 0.907 0890 0873 0.857 0.842 0.826 0.812 0797 0.783 0.769 0756 0.743 0731 0718 0.706 0.694 0.683 0672 0.661 0.650 0.640 3 0889 0864 0840 0816 0.794 072 0751 0731 072 0693 0675 0658 0641 0624 0609 0593 0579 0564 0551 0537 0524 0512 0855 0823 0792 0763 0735 0708 0683 0659 0636 0613 0592 0572 0.552 0534 0516 0499 0482 0467 0451 0437 0423 0410 5 0822 0.784 0.747 0713 0681 0.650 0621 0.593 0.567 0.543 0519 0497 0476 0.456 0437 0419 0402 0.386 0370 0355 0341 0.328 6 0790 0.746 0705 0666 0630 0.596 0564 0535 0.507 0480 0.456 0432 0410 0.390 0370 0.352 0335 0319 0.303 0.289 0275 0.262 7 0 760 0.711 0.665 0623 0.583 0547 0513 0.482 0.452 0.425 0.400 0376 0.354 0333 0314 0.296 0.279 0263 0.249 0.235 0222 0.210 10731 0.677 0627 0582 0.540 0.502 0467 0.434 0404 0376 0351 0327 0.305 0.285 0.266 0.249 0233 0218 0.204 0191 0.179 0.168 9 10703 0645 0592 0544 0500 0460 0424 0.391 0361 0333 0308 0284 0263 0243 0225 0209 0194 0180 0167 0155 0144 0134 10 0676 0614 0558 0508 0.463 0422 0386 0.352 0322 0295 0270 0247 0227 0.208 0191 076 0162 0149 0137 0126 0.116 0107 1 0650 0585 0527 0475 0429 0.388 0350 0317 0287 0261 0237 025 0195 0178 0162 0148 0135 0123 012 0103 0094 0086 2 0625 0.557 0.497 0444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0152 0137 0124 0112 0102 0.092 0083 0.076 0.069 0601 0.530 0469 045 0368 0326 0290 0.258 0229 0.204 0182 0.163 0.145 0130 016 0104 0.093 0.084 0.075 0068 0061 0.055 4 057 0505 0442 0388 0340 0299 0263 0232 0205 0181 0160 0.141 0125 011 0099 0088 0078 0069 0062 0055 0049 0044 5 0555 0.481 0417 0362 0.315 0275 0239 0.209 0183 0160 0.140 0123 0108 0.095 0084 0074 0.065 0.057 0.051 0045 0.040 0.035 6 0534 0458 0394 0339 0.292 0252 0218 0188 0163 0141 0123 0107 0.093 0081 0071 0062 0054 0047 0042 0036 0032 0028 7 053 0436 0371 037 0270 0231 0198 0.170 0.146 0.125 0108 0093 0.080 0069 0.060 0.052 0.045 0.039 0.034 0.030 0026 0.02. 8 0494 0.416 0.350 0296 0.250 0212 0180 0153 0130 0.11 0.095 0081 0.069 0059 0051 0044 0038 0032 0028 0024 0021 0.018 1 0475 0396 0331 0277 0232 0194 0164 0138 016 0098 0083 0070 0060 0051 0043 0037 0031 0027 0023 0020 007 0014 20 0.456 0377 0312 0258 0.215 0178 0.149 0124 0104 0087 0073 0061 0.051 0043 0037 0031 0026 0022 0019 0016 0014 0.012 21 0439 0359 0294 0242 0199 0164 0.135 02 0093 0077 0064 0053 0.044 0037 0031 0026 0022 0018 0015 0013 0011 0009 22 0.422 0342 0278 0226 0184 0150 0123 0101 0.083 0.068 0.056 0.046 0.038 0.032 0026 0.022 0.018 005 0013 0011 0.009 0.007 23 0406 0326 0262 0.211 0170 038 012 0.091 0074 0.060 0.049 0.040 0.033 0.027 0022 0.018 0.05 0012 0.010 0009 0.007 0.006 24 0390 0310 0247 0197 0158 0126 0102 0082 0066 0053 0043 0035 0028 0023 0019 0015 003 0010 0008 0007 0006 0.005 25 0.375 0295 0233 0184 0.146 016 0092 0074 0059 0047 0038 0030 0024 0020 0016 003 0010 0009 0007 0.006 0005 0.004 26 0361 0281 0220 0.172 0135 0106 0084 0066 0053 0042 0033 0026 0021 0017 0014 001 0009 0007 0006 0005 0004 0003 27 0347 0.268 0207 0161 0.125 0098 0.076 0.060 0.047 0.037 0029 0023 0.018 0014 001 0009 0.007 0006 0.005 0.004 0003 0002 28 0333 0.255 0196 0150 0.116 0090 0.069 0.054 0.042 0.033 0.026 0020 0.016 0.012 0010 0.008 0006 0005 0.004 0.003 0.002 0.002 29 0321 0243 0185 0141 0107 0082 0063 0048 0037 0029 0022 007 0.014 0011 0008 0006 0005 0004 0003 0002 0002 0002 30 0308 0231 0174 0131 0.099 0075 0.057 0044 0033 0026 0020 0015 0012 0009 0007 0005 0004 0.003 0003 0002 0002 0001 40 0208 0142 0097 0067 0.046 0032 0022 0015 001 0.008 0005 0.004 0003 0002 0001 0001 0001 0000 0000 0000 0000 0000