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Problem 7-23 Lou Barlow, a divisional manager for Sage Company, has an...

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Accounting

Problem 7-23
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 18% each of the last three years. He has computed the cost and revenue estimates for each product as follows:
The company's discount rate is 16%.
At the last two pages of this ICQ document, you will find Exhibit 7B-1 and Exhibit 7B-2; use them to determine the
appropriate discount factor(s) using table.
Required:
Calculate the payback period for each product.
Calculate the net present value for each product.
Calculate the internal rate of return for each product.
Calculate the project profitability index for each product.
Not covered Galculate the simple rate of return for each product.
6 a. For each measure, identify whether Product A or Product B is preferred.
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