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 23% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product B Product A Initial investment: Cost of equipment (zero salvage $300.000 value) Annual revenues and costs: Sales revenues $350,000 $500,000 $450,000 $ 210,000 $ 160,000 Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 44,000 $ 80,000 $86,000 $ 61,000 The company's discount rate is 16%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor using tables. Required: Calculate the payback period for each product. (Round your answers to 2 decimal Calculate the payback period for each product. (Round your answers to 2 decimal places.) X Answer is complete but not entirely correct. Payback period Product A 2.83 years Product B 2.92 years Calculate the net present value for each product. (Rount discount factor(s) to 3 decimal places.) Answer is complete but not entirely correct. Product A Product Net present value $ 26,440 $ 45,620 3. Calculate the internal rate of return for each product. (Round percentage answer to 1 decimal place. i.e. 0.1234 should be considered as 12.3% and Round discount factor(s) to 3 decimal places.) 3. Calculate the internal rate of return for each product. (Round percentage answer to 1 decimal place. i.e. 0.1234 should be considered as 12.3% and Round discount factor(s) to 3 decimal places.) & Answer is complete but not entirely correct. Product Product A 22.5 Internal rate of return % 21.0 % % 4. Calculate the project profitability index for each product. (Round discount factor(s) to 3 decimal places. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Product A Product Project profitability index 0.16 0.12% 5. Calculate the simple rate of return for each product. (Round percentage answer to 1 decimal place. i.e. 0.1234 should be considered as 12.3%.) & Answer is complete but not entirely correct. Product A 15.3 $ % Product B 14.2 % Simple rate of return 6a. For each measure, identify whether Product A or Product B is preferred. Answer is complete and correct. Net Present Value Product Profitability Index Product A Payback Period Product Internal Rate of Return Product A Net Present Value Product B Profitability Index Payback Period Internal Rate of Return Product A Product A Product A 6b. Based on the simple rate of return, Lou Barlow would likely: Accept Product A Accept Product B Reject both products