14-23 (Algo) Comprehensive Problem [LO14-1, LO14-2, LO14-3, LO14-5, LO14-6] 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 or investment (ROI), which has exceeded 23% 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 The company's discount rate is 18%. Product A Product B $310,000 $510,000 $360,000 $460,000 $ 164,000 $214,000 $ 62,000 $ 102,000 $ 81,000 $ 65,000 Click here to view Exhibit 14B-1 and Exhibit 14B-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? 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 Print Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A eferences Calculate the net present value for each product. (Round your final answers to the nea Product A Product B Net present value Print Req 1 Req 2 Req 3 Req D ferences Req 5 Req 6A Calculate the Internal rate of return for each product. (Round your percentage answers considered as 12.3%.) Product A Product B Internal rate of return % Hint Complete this question by entering your answers In the tabs below. Print Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A References Calculate the profitability Index for each product. (Round your answers to 2 decimal pla Profitability index + Product A Product B Rea 3 Reg 5> Req 1 Req 2 Req 3 Req 4 Req 5 Rec Calculate the simple rate of return for each product. (Round your percentage a considered as 12.3%.) Product A Product B Simple rate of return % % 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 Return Profitability Index Payback Period of Return