Subject: acounting i just need the internal rate of return. Internal rate of returnProduct A26.4Product B24.8%< Req 2Req 4 > 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 thelast three years. He has computed the cost and revenue estimates for each product as follows:Product AProduct BInitial investment:Cost of equipment (zero salvage value)Annual revenues and costs:Sales revenuesVariable expensesDepreciation expenseFixed out-of-pocket operating costs.The company's discount rate is 18%.$ 340,000$ 390,000$ 176,000$ 68,000$ 84,000$ 540,000$ 490,000$ 226,000$ 108,000$ 64,000

It's important to note that the IRR should be interpreted in conjunction with other financial…

Lou Barlow, a divisional manager for Sage Company, has ar year period. His annual pay raises are determined by his di last three years. He has computed the cost and revenue es Initial investment: Produ

Lou Barlow, a divisional manager for Sage Company, has ar year period. His annual pay raises are determined by his di last three years. He has computed the cost and revenue es Initial investment: Produ

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 20GI

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Question

Subject: acounting

i just need the internal rate of return.

Internal rate of return
Product A
26.4
Product B
24.8%
< Req 2
Req 4 >

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
Initial investment:
Cost of equipment (zero salvage value)
Annual revenues and costs:
Sales revenues
Variable expenses
Depreciation expense
Fixed out-of-pocket operating costs.
The company's discount rate is 18%.
$ 340,000
$ 390,000
$ 176,000
$ 68,000
$ 84,000
$ 540,000
$ 490,000
$ 226,000
$ 108,000
$ 64,000

Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

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