Calculate problems 1-7 for product A and product B.

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 followst Product Product B Initial investment Cost of equipment (200 salvago value) 5170,000 $380,000 Annual revenues and costs: Sales revenues $250,000 $350,000 Variable expenses 5120,000 $170,000 Depreciation expense $ 34,000 $ 76,000 Fixed out-of-pocket operating costs $ 70,000 $50,000 The company's discount rate is 16%. 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 project profitability index for each product 5. Calculate the simple rate of return for each product. 6. For each measure, identify whether Product A or Product B is preferred. 7. Based on the simple rate of return, Lou Barlow would likely