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 22% 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) $ 350,000 $ 550,000 Annual revenues and costs Sales revenues $ 390,000 $ 470,000 Variable expenses $ 178,000 $ 210,000 Depreciation expense $70,000 $110.000 Fixed out-of-pocket operating costs $ 87,000 $ 67,000 The company's discount rate is 20%. Click here to view Exhibit 148-1 and Exhibit 148.2. 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. 6. Based on the simple rate of return, which of the two products should Lou's division accept? Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product A Product B Payback period years years Calculate the net present value for each product. (Round your final answers to the nearest whole dollar amount Product A Product B Net present value Calculate the internal rate of retum for each product. (Round your percentage answers to 1 decimal place Le. 0.123 should be considered as 12.3%.) 1614 Product A Product B Internal rate of return 96 % Calculate the profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Profitability index Calculate the simple rate of return for each product. (Round your percentage answers to 1 decimal place 0.123 should be considered as 12.3%. Product A Product B Simple rate of return For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period Internal Rate Simple Rate of of Return Retum Based on the simple rate of return, which of the two products should Lou's division accept? Accept Product A O Accept Product B Reject both products