Q: Need Help on questions on 2,3,4,5 Product A and B as follows: 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 divisions 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: | | Product A | Product B | Initial investment: | | | | | | Cost of equipment (zero salvage value) | $ | 170,000 | | $ | 380,000 | Annual revenues and costs: | | | | | | Sales revenues | $ | 250,000 | | $ | 350,000 | Variable expenses | $ | 120,000 | | $ | 170,000 | Depreciation expense | $ | 34,000 | | $ | 76,000 | Fixed out-of-pocket operating costs | $ | 70,000 | | $ | 50,000 | | The companys discount rate is 16%. | Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor using tables. | | Calculate the payback period for each product. (Round your answers to 2 decimal places.) 1. | | | Product A | Product B | Payback period | 2.83 | years | 2.92 | years | | 2. | | | Product A | Product B | Net present value | | | | 3. | Calculate the internal rate of return for each product. (Round percentage answer to 1 decimal place. i.e. 0.1234 should be considered as 12.3% and Round discount factor(s) to 3 decimal places. | | | Product A | | Product B | | Factor of the internal rate of return | | % | | % | | | . | Calculate the net present value for each product.(Round discount factor(s) to three decimal places.) | | Calculate the project profitability index for each product. (Round discount factor(s) to three decimal places. Round your answers to 2 decimal places.) | | | Product A | Product B | Project profitability index | | | | | Calculate the simple rate of return for each product. (Round percentage answer to 1 decimal place. i.e. 0.1234 should be considered as 12.3%.) | | | Product A | Product B | Simple rate of return | | % | | % | | | | | | | |