Question: can please help out how to figure out this problem, I would really appreciated! Lou Barlow, a divisional manager for Sage Company has an opportunity
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 21% each of the least 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) $ 270,000 $430,000 Annual revenues and costs: Sales revenues $ 320,000 $ 420,000 Variable expenses $ 148,000 S 198,000 Depreciation expense $ 54,000 96,000 Fixed out-of-pocket operating costs $77,000 557,900 $ The company's discount rate is 19% Click here to view Exhibr148-1 and Exhibit 148.2. 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. 65. 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 Reg 2 Reg 3 Reg 4 Reg 5 6 Reg 68 Calculate the net present value for each product. (Round your final answers to the nearest whole dollar amount.) Product Product B Net present value
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