Help Save 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 (Ron 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 Products Initial investment: Cost of equipment (zero salvage value) $370,000 $530,000 Annual revenues and costs: Sales revenues $400,000 $510,000 Variable expenses $180,000 $250,000 Depreciation expense $ 74,000 $106,000 Fixed out-of-pocket operating costs $ 85,000 $72,000 The company's discount rate is 19% Click here to view Exhibit 128.1 and Exhib12B.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 project 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 is preferred 6b Based on the simple rate of return, Lou Barlow would likely 26 III Next >