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 25% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B Initial investment Cost of equipment (zero salvage value) Annual revenues and costs Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $340,000 $540,000 $390,000 490,000 $176,000 $ 226,000 $ 68,000 108,000 $84,000 $ 64,000 The company's discount rate is 18%. Use Excel or a financial calculator to solve any time value of money problems. Required: 1. Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product A Product B Payback period years years 2 Calculate the net present value for each product. (Round answers to the nearest dollar.) Product A ProductB Net present value 3. Calculate the project profitability index for each product. (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%.) Product A Product B Simple rate of return a. For each measure, identify whether Product A or Product B is preferred Net Present Profitability Payback Period Value Index