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 20% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $200,000 $410,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $280,000 $132,000 $ 40,000 $ 73,000 $380,000 $182,000 $ 82,000 $ 53,000 The company's discount rate is 18% Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product 2.67 years Product B 2.83 years Payback period Calculate the net present value for each product. (Use the appropriate table to determine the discount factor(s).) Product A Product B Net present value 3. Calculate the project profitability index for each product. (Use the appropriate table to determine the discount factor(s). Round your answers to 2 decimal places.) Product A Product B Project profitability index 4. 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% and use the appropriate table to determine the discount factor(s).) Product A Product B Simple rate of return 5a. For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period 5b. Based on the simple rate of return, Lou Barlow would likely Accept Product A Accept Product B Reject both products