Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. lou barlow, a divisional manager for sage company,

Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell...

60.1K

Verified Solution

Question

Accounting

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 20% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Initial investment: Cost of equipment (zero salvage value) $ 260,000 $ 470,000 Annual revenues and costs: Sales revenues $ 310,000 $ 410,000 Variable expenses $ 144,000 $ 194,000 Depreciation expense $ 52,000 $ 94,000 Fixed out-of-pocket operating costs $ 76,000 $ 56,000 The companys discount rate is 18%. 1. Calculate the payback period for each product. 2. Calculate the net present value for each product. 3. Calculate the project profitability index for each product. 4. Calculate the simple rate of return for each product.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

A distribution of values is normal with a mean of 80 and a standard deviation of...

Biology
1.2K views

Lancelet outgroup Lamprey Tuna Salamander Turtle What separates a salamander from a turtle O Jaws...

Physics
1.2K views

Specific res b 6 d 1 5 c 3 94 The conversion of a moving...

Physics
1.2K views

Q12 A block of 10 kg mass is placed on a rough inclined surface as...

Basic Math
1.2K views

In a product liability case, a company can settle out of court for a loss...

Accounting
1.2K views

Planetary Travel Co. has $148,000,000 in stockholders' equity. Common stock is...

Accounting
1.2K views

Record journal entries for October 1, October 15, and October 20 E11-21 (Algo) Recording...

Accounting
1.2K views

define price variance?

Accounting
1.2K views

Purchase Price: 7,000,000 Demolition of Old Building: 500,000 Proceeds from sale of salvage...

Finance
1.2K views

Find the APR, or stated rate, in each of the following cases: (Do not round...

Accounting
1.2K views

On December 31, 2017, Po Company sold equipment to So Company for P75,000 that had...

Finance
1.2K views

Hanks Barbecue just paid a dividend of $1.75 per share. The dividends are expected to...