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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 19% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product Product B Initial investment: Cost of equipment (zero salvage value) $ 190,000 $ 400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17%. Click here to view Exhibit 148-1 and Exhibit 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. Req1 Reg 2 Reg 3 Reg 4 Reg 5 Reg SA Calculate the payback period for each product. (Round your answers to 2 decimal places. Product A Product B Payback period years years Reg 2 > 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 19% 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) $ 190,000 $400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,800 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17%. Click here to view Exhibit 14B-1 and Exhibit 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 1 Req2 Reg 3 Req 4 Reg 5 Req 6A Calculate the net present value for each product. (Round your final answers to the neares Product A Product B Net present value & Regi Roq3 > 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 19% 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) $ 190,000 $ 400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17% Click here to view Exhibit 14B-1 and Exhibit 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. Req 1 Reg 2 Req3 Req 4 Req5 Req 6A Calculate the internal rate of return for each product. (Round your percentage answers to considered as 12.3%.) Product A Product B Internal rate of return 2 ipped Book 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 19% 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) $ 190,000 $ 400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17%. Click here to view Exhibit 148-1 and Exhibit 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. R Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Req 6A Calculate the profitability index for each product. (Round your answers to 2 decimal places Product A Product Profitability index Req3 Reqs > 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 19% 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) $ 190,000 $ 400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17%. Click here to view Exhibit 14B-1 and Exhibit 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. Req 1 Reg 2 Reg 3 Reg 4 Req5 Req 6A R Calculate the simple rate of return for each product. (Round your percentage answers to 1 considered as 12.3%) Product A Product B Simple rate of return & Rega Req GA > d 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 19% 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) $ 190,000 $400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17% Click here to view Exhibit 14B-1 and Exhibit 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. Req 1 Req2 Req 3 Req 4 Reg 5 Req 6A R For each measure, identify whether Product A or Product B is preferred. Net Present Profitability Payback Internal Rate Simple Rate of Value Period of Return Return Index 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 19% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product Product B Initial investment: Cost of equipment (zero salvage value) $ 190,000 $ 480,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,880 $ 80,000 Fixed out-of-pocket operating costs $ 72,600 $ 52,000 The company's discount rate is 17%. Click here to view Exhibit 14B-1 and Exhibit 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. R Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Req 6A Based on the simple rate of return, which of the two products should Lou's division accepti Accept Product A Accept Product B Reject both products EXHIBIT 143-1 Present Value of SI: (+) 06 Periods 4%. 5% 6% 7% 84 996 10% 1196 1294 13% 14% 1996 16% 179 18 19% 20% 21% 2294 23% 24% 25% 1 0.962 0.92 0.90 0.935 0926 0917 0.909 0.001 0893 080705700 2855008000833 0.826 0.8200.815 NO 2 0925 0.9070.890 0.8730.857 0.8420826 0812 0.797 0.783.07560743 0.731 0.7180.706 0.69 0.683 0.672 0.661 0.650 0,640 3 08890.864 0.84008160794 0.772 0.751 731 0.712 0.693 667806805410.6240.6090.5935790.364 0.551 0.517 0.5240.312 4 0855 0.823 0.792 0.763 0735 0.708 0.63 0659 0.636 0.613 0.592 6572 552 0.534 0.516 0.4990-452 0.467 0.451 0.007 0.423 0.410 5 0822 0.784 0.747 0.713 0.681 0.650 0.621 593056754305190-2970-1760.456 0.437 0.419 0.002 0.386 0.3700355 0.341 0.328 6 0.790 0.746 0,70 0.666 0.650 0.596 0564 595 0.507 0.400.456 0432 0.410 030 0.370 0352 0.335 0.319 | 0.303 0.259 0.275 0.262 7 0.760 0.711 0,665 0.623 0.5830.547 0.5130492 0.452 0.4250.300.376 354 0333 0.3140.296 0.279 0.263 0.2490.235 0.222 0.210 0.731 0.677 0.6220 SR20.540 0.502 0.467 0.4340404 0.376 0351 0327 03050285 0.266 0.249 0.23 0.218 0.2040191 0.1790.168 0.700 0.545 0.592 0.54 0.500 0.4600424 0.391 0.36101330308 0254 023 0243 0.225 0.2090.194 0.18 0.167 0.155 0.144 0.134 IO 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0352 0.322 0.295 0.270 0,247 0.227 0.20 0.19 0.176 0.163 0.149 0.137 0.126 0.116 0.107 11 0.650 0.585 0.527 0.475 0.429 0.388 0.350317 0.287 0.26102370215 0.19 0.17 0.162 0.14% 0.135 0.123 0.112 0.103 0.094 0.086 12 0.625 0.5570.4970444 0.1970.356 0.319 0.285 0.257023102080187 0.16 0.152 0.137 0.1240112 0.1020.092 0.083 0.076 0.009 13 0 0 530 0.4600 415 0363 032 0200 0258 0.229 0204 013 01635450330 0 116 0 104 003 00640075 0.06 0.0! 0,055 14 05770.Sos 0.44203880 340 0.299 263 0232 30 IKI 0.160.141 0.125 0.11 0.099 08 0.078 0.069 0.062 0.05 0.049 0.044 15 0555 0.481 0.417 0.362 0315 0.275 0.239 0209 0.183 0100 0100 0.123.108 0.095 0.084 0.0740065 0,057 0.081 0.045 0.00 0.035 16 0534 0.458 0.394 0.339 0.292 0.252 0218 0.18 0.163 0.141 0.123 0.107 0.093 0.051 0.071 0.062 0.054 0.007 0.002 0.06 0.002 0.028 17 0 513 0.436 0.3710317 0.270 0.231 0.198 0.1700.146 0.125 0.10 0.093 000 0.000 0.052 0.045 0.039 0.0340030 0.026 0.023 18 0494 0416 0.750 0.296 0.250 0.212 0.100.157 0.130 0.11 0.095 DORI 006 0.099 DOST004+ 0.05 0.032 0.028 0.024 0.021 0,018 19 0.475 0.396 0.33 0.277 0232 0.1940.1640.138 0.116 0.098 0.03 0.00 0.00 0.05 0.43 0.037 0.031 0.027 0.023 0.030 0.01 0.014 20 0456 0.377 0.312 0.25% 0.215 0.18 0.149 1240.104 0.0570073 0.061 0.051 0.04 0.037 0.031 0.026 0.002 0.0190016 0.014 0.012 21 0.439 0359 0.294 0 242 0.199 0.1640.135 0.112 0.093 0,077 0.064 0.053 0.04 0.037 0.031 0.026 0.022 0.018 0,015 0.013 0.01 0.009 22 0.422 0.342 0.278 0.226 0.184 0.150 0.123.101 0.03 0.0680056 0.045 0.035 0.032 0.025 0.022 0.0180.015 0.013 0.011 0.0090.007 23 0.006 026 0,262 0.211 0.170 0.138 0.112 0091 0.074 0.000 0.009 0.000 0.033 0.027 0.022 0,015 0,015 0,012 0010 0.009 0.007 0.006 24 0.390 0310 0.247 0.197 0.158 0.126 0.102 0.02 0.066 0.053 0.043 0.035 0.025 0.023 0.019 0,015 0,013 0.010 0.008 0.007 0.006 0.005 25 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.0590.047 BOE 0.000 0.00 0.00 0.06 0.03 0.010 0.0090.007 0.006 0.005 0.004 26 0.361 0.281 0.220 0.172 0.135 0.106 0.04 0.066 0.053 0,042 0.033 0.005 0.01 0.017 0.014 0.00 0.00 0.00 0.00 0.00 0.00 0.003 27 0347 0.268 0.207 0.161 0.125 0.098 0.076 0.06 0.047 0.437 099 0023 0.05 0.014 0.0 0.00 0.007 0.006 0.005 0.004 0.003 0.002 28 0.333 0.255 0.1960.150 0.116 0,090 0.069 0.054 0.042 0.003 0.025 0.00 0.0160.012 0.000 0.008 0.006 0.005 0,004 0.003 0.002 0.002 79 0.321 0.243 0.185 0.1410.107 0.02 0.063 0.048 0.037.09 0.002 0.017 2.014 0.0110.008 0.006 0.005 0.0040.003 0.002 0.002 0.002 30 0 308 0.231 0,174 0.131 0.01 0.025 0.05 0.044 0,033 0,026 0.00 0.01 0.012,000 0.00 0.00 0.004 0.003 0.003 0.002 0.0002 0,001 40 0208 0.142 0.097 0.067 0.046 0,032 0.022 0.015 0.0110.008 0.005 0.000 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 EXHIBIT 14B-2 Present Value of an Annuity of S1 in Arrears Periods 4% 5% 6% 7% 8% 996 10 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 1 0.962 0.9520.943 0.93 0.926 0.917 0.909 0.901 0.893 0.885 0.8730370082 0.335 0.847 0.8.40 0.833 0.826 0.820 0.50 0.5060.500 2 1886 1.859 1833 1808 1.783 1.739 1.736 L713 1.690 166 167 1626 1605 1.385,1.586 1.547 1.528 1.509 L.292147014571.440 3 2.775 2.723 2673 2624 2.577 2531 2.487 2444 2.4022361 2322 2.283 2.246 2.210 2.174 2.100 2105 2.074 2.042 2011 1.951 1952 4 3.60 3.546 3463 3387 3.312 3.240 3.170 2.102 3.037 29742914 2.855 2.798 2.143 2.690 2.6.39 2.389 2.560 2.94 2448 2.400 2.362 5 4.452 4329 4212 4.100 3.991 3.890 3.791 3.66 3.605 3.517 3433 3.352 3.274 3.1993.127 3.058 2991 2.926 2.864 2.803 2.745 2.699 6 5.2425.076 4917 4.767 4623 4.486 455 4.231 4.111 3.998 3.889 3.784 3.685 3.589 3.695 3.410 3.326 3.245 3.167 3.092 3.020 2.951 7 60625.786 3.5523389 5.206.033 4868 4.712 4.5644423 4288 4.160 4.039 3.922 3.8123.706 3.605 3.50 3.416 3.327 3.2423.161 6.733 6,46% 6.210 5.971 5.147 5.535 5.335 5.146 4.968 4799 4.6.19 4487 4.346 4.207 4,078 3.954 337 3.726 3619 2.515 3.421 3.329 9 7.435 2.108 6.802 6513 6.2475.9955.759 5537 5328 3.132 4996 4.7724.607 4,451 43034.163 4031 3.905 3.786 5567333663463 10 KUI 3.722 7.300 70246.710 641 6.145 5889 5.650 3426 5216 5.019 4833 4659 4.98 439 4.1924,054 2.923 3.7993623571 11 8.760 8.306 7.657 7499 7.139 6.50 6.495 6.207 5938 5.687 5.453 5.234 5.099 4x36 46.56 4.486 4.327 4.1774,035 3.902 3.776 3.656 12 9.3858.8638.3842.943 7.5367.161 68146.1926.1945.9185.660 5.4215.197 4.9884.793 4.611 4.439 4.278.4.1273.985 3.8513.725 13 9.9869-394 8.853357.904 74877,1036.750 6.434 6.1225.842 3.583 5.342.11% 49104.715 4533 4.3624.203 4053 3.912 3.780 14 105639.899 9.295 8.745 8.246 7.786 73676.982 6 628 6.302 6002 5.7245.468 5.239 5.00 4800 4611 4452 4265 4.108 342 3824 15 11.11% 103N097129.10 X.539 2.061 7606 7.191 611 6462 61435.847 5.575 5.324 5.0934676 675 4,489 4315 4.153 4001 3859 16 11652 10 838 10.106 94478.851 13 7.824 7.379 69746604 6265 59545668 5.4055162 493 4.730 4.516 4357 4.189 4011 3887 17 12.166 11.274 10:477 9.763 9.1228544 2032 7549 7.1206.729 6.373 6.047 5.789 5.4755.222 4.990 4.775 4.576 391 4.219 4.059 1.910 18 12.659 1690 10.828 10.0599,372 87568.201 7.702 7.250 684064676128 5.818 5.534 5.273 5.031 48124.668 4.419 42434.00 3.928 19 13.13412085 TL158 10.3369604950 365 7.839 7366 6938 6.350 6.1965.877 554 5316 5.070 4243 4.635 4.42 4.263 4.097 3.942 20 13.390 12.462 11.470 10.5949.818 9.129 514 763 7.409 7.025 0.623 6.259 5.929 3.628 5.3535.101 4870 4657 4460 4.279 4.110 1.954 21 14.029 12.821 11.764 10.836 10.0129.2938.619.075 7.562 7.1026.687 63125.9735.6655186 3.1274891 4.635 4.476 4.292 4.121 3.63 22 14.451 13.163 12.042 11.061.10.2019.442 8.7728.176 7.6457.170 6.7436.35960113.696 3.4105.149 4.9094.60 4.435.4.302 41303970 23 14857 13.489 12.303 1.272 10371 9.580 88838.266 7.718 7.230 6.792 6.399 6046 5.723 5:432 5.167 4925 4.703 4.499 4311 4.1373976 15.347 13.799 12.550 11460 10 5299.7078.9853487.784 7.283 681564146,0735.746 5451 5.182 4937 4.7134 507 43184.1433.981 25 15.623 14.098 12.75301,659 1067508239.077842278437.330 6.573 6.464 6.0975.766 5.467 5.195 4,945 4.721 4914 4.323 4.147 3985 26 15.983 14375 13.003 11.836 108109.929 9.161 3.488 7.896 7.372 6.906 6.491 6.115.7833.480 3.206 4.956 4.725 4.520 4.325 4.151 3.983 16 130 14.643 111 11967 10,915 10.0229.237548 79437409 6935 651461565.798 5.492 9215 4.964 47344.524 433241543990 28 16.663 14.898 13:42 12.137 11.05 10.116 9.307 8.602 7,984 7.441 6.961 6.514 6.152 5.810 5.503 5.223 4970 4.739 4.598 4.335 4.197 1992 29 16 984 15.141 13 591 12.278 11.158 10.1989 370 680002 7470 6983 6551 6.166 3.520 510 5279 4975 4.734.331 4.337 4.199 3994 30 17.292 15.372 13.765 02.409 01.288 10.270 9.4278.694 ROSSI 249670036.5666.172 5.809 5.125.235 4979 4.746 4534 4.3094.1603.925 40 19.793 17 159 15.046 13.139 1425 10.7575779951 244 634 7105 664263335871 55485258 4097 4.760 4544 4.347 4166 3.999