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Problem 12-23 Comprehensive Problem [LO12-1, LO12-2, LO12-3, LO12-5, L012-6] 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 25% each of the last three years. He has computed the cost and revenue estimates for each product as follows 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 $480,000 $172,000 $225,000 $ 68,000 $105,000 $ 83,000 $ 66,000 The company's discount rate is 17% 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 Reg 4 Reg 5 Req6A Reg 68 Calculate the payback period for each product. (Round your answers to 2 decimal places.) UTILI HUIU IU VIEW LANUL 126-1 NU EXMB 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 Req Reg 3 Reg 4 Req5 Req 6A Reg 6B Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product A Product B Payback period years years Req2 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. Req 1 Reg 2 Reg 3 Reg 4 Reqs Req 6A Calculate the net present value for each product. (Round your final answers to the nearest whole dollar amount.) - Reg 6B Product Product B Net present value Reg 1 Reg 3 uiculate the net present value for each product. ou o edch 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. 6. 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 Reg 4 Req 5 Reg 6A Reg 6B Calculate the internal rate of return for each product. (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.) Product A Product B Internal rate of return Req2 Reg 4 T o 5. Calculate the simple rate of return for each product. prontumily Me IUI 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 Reg 4 Reg 5 Req 6A Reg 68 Calculate the project profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Project profitability Index Req3 Req5 3. Calculate the internal rate of return for each product. 1 0 Tue 10 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 Reals Req 6A Req 6B Calculate the simple rate of return for each product. (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.) Product A Product B Simple rate of return Req 4 Req 6A I LANUL 123-1 No 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 2 Req3 Reg4 Req5 Reg 6B Reg OR For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period Internal Rate of Return Simple Rate of Return Reg 5 Reg 6B 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 5 Reg 6A Req 6BN Reg 4 Reg 1 Reg 3 Reg 2 Based on the simple rate of return, Lou Barlow would likely: Accept Product A Accept Product B Reject both products Reg 6A Req6B

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