Business, 21.04.2020 00:01 graceduke2005p6z8yp

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 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) $270,000 $480,000
Annual revenues and costs Sales revenues $320,000 $420,000
Variable expenses $148,000 $198,000
Depreciation expense 41,000 83,000
Fixed out-ofpocket operating costs 77,000 57,000
The company's discount rate is 19%.

Calculate the payback period for each product. (Round your answers to 2 decimal places.)

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

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