12-23 (Algo) Comprehensive Problem [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6] 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 24% 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) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs Product A Product B $ 326,050 $ 515,000 $ 370,000 $ 168,000 $ 66,000 $470,000 $ 218,000 $103,000 $ 82,000 $ 68,000 s The company's discount rate is 15%. Click here to view Exhibit 128-1 and Exhibit 128-2. 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 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, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Calculate the payback period for each product. (Round your answers to 2 decimal place Product A Product B Payback period years years Req 1 Req 2 > 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 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, which of the two products should L Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Rec Calculate the net present value for each product. (Round your final answers to Product A Product B Net present value < Req 1 Req 3 Req 1 Req 2 Req 3 Req 4 Req 5 Re Calculate the internal rate of return for each product. (Round your percentage considered as 12.3%.) Product A Product B Internal rate of return % % < Req 2 Req 4 Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req E Calculate the profitability index for each product. (Round your answers to 2 deci Profitability index Product A Product B < Req 3 Req 5 > b. Based on the simple rate of return, which of the two products should Lou' Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Reg 5 Req 6A Req 5 Calculate the simple rate of return for each product. (Round your tage answ considered as 12.3%.) Product A Product B Simple rate of return % % < Req 4 Req 6A > Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4. Req 5 Req 6A For each measure, identify whether Product A or Product B is preferred. Net Present Value Internal Rate Simple Rate of Profitability Index Payback Period of Return Return < Req 5 Req 6B > Complete this question by entering your answers in Req 1 Req 2 Req 3 Req 4 Based on the simple rate of return, which of the two produ Accept Product A OAccept Product B OReject both products < Req 6A