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 19% each of the last three years. He computed the following cost and revenue estimates for each product: Product A Product B Initial investment: Cost of equipment (zero salvage value) $ 190,000 $ 400,000 Annual revenues and costs: Sales revenues $ 270,000 $ 370,000 Variable expenses $ 128,000 $ 178,000 Depreciation expense $ 38,000 $ 80,000 Fixed out-of-pocket operating costs $ 72,000 $ 52,000 The company's discount rate is 17%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Calculate each product's payback period. 2. Calculate each product's net present value. 3. Calculate each product's internal rate of return. 4. Calculate each product's profitability index. 5. Calculate each product's simple rate of return. 6a. For each measure, identify whether Product A or Product B is preferred. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Required 1 Required 2 Required 3 Required 4 Required 5 Required 6A Required 6B Calculate each product's payback period. Note: Round your answers to 2 decimal places. Product A Product B Payback period years years Required 1 Required 2 Required 3 Required 4 Required 5 Required 6A Required 6B Calculate each product's net present value. Note: Round your final answers to the nearest whole dollar amount. Product A Product B Net present value Required 1 Required 2 Required 3 Required 4 Required 5 Required 6A Required 6B Calculate each product's internal rate of return. Note: Round your percentage answers to 1 decimal place i.e. 0.123 should be considered as 12.3%. Product A Product B Internal rate of return % % Required 1 Required 2 Required 3 Required 4 Required 5 Required 6A Required 6B Calculate each product's profitability index. Note: Round your answers to 2 decimal places. Product A Product B Profitability index Required 1 Required 2 Required 3 Required 4 Required 5 Required 6A Required 6B Calculate each product's simple rate of return. Note: Round your percentage answers to 1 decimal place i.e. 0.123 should be considered as 12.3%. Product A Product B Simple rate of return % % Required 1 Required 2 Required 3 Required 4 Required 5 Required 6A Required 6B For each measure, identify whether Product A or Product B is preferred. Net Present Value Internal Rate Simple Rate of Return Profitability Index Payback Period of Return Required 1 Required 2 Required 3 Required 4 Required 5 Required 6A Required 6B Based on the simple rate of return, which of the two products should Lou's division accept?