Comprehensive Problem - Leslie Roberts manages the Eastern Division of Garrick Company. Her division is considering which of the following projects to take on for the next five years. She has computed the cost and revenue estimates for each project 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 AGS $350,000 $390,000 $ 178,000 $70,000 $87,000 SMS $550,000 $470,000 $210,000 $110,000 $67,000 The company's discount rate is 20%. In the past, Leslie's annual bonuses were determined by her division's return on investment (ROI), which has exceeded 22% each of the last three years. Required (show your work): 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 which product is preferred. 6b. If you were Leslie, which of the two products would you produce? Why?