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: Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Product A Product B $260,000 $470,000 Variable expenses $310,000 $144,000 $ 52,000 Fixed out-of-pocket operating costs $ 76,000 Depreciation expense $410,000 $194,000 $ 94,000 $ 58,000 The company's discount rate is 18%. Click here to view Exhibit 14B-1 and Exhibit 14B-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. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. 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. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 6B Calculate the payback period for each product. (Round your answers to 2 decimal places.) Payback period Product A Product B years years Req 1 Req 2 Req 3 Req 4 Calculate the payback period for each product. (Round Payback period Product A Product B years years Req 1 Req Req 3 Req 4 Calculate the net present value for each product. (Round Product A Product B Net present value Calculate the internal rate of return for each product. (Rou considered as 12.3%.) Product A Product B Internal rate of return % % Req 1 Req 2 Req 3 Req 4 Calculate the profitability index for each product. (Round you Profitability index Product Product A B Req 1 Req 2 Req 3 Req 4 Req 5 Calculate the simple rate of return for each product. (Round your percer considered as 12.3%.) Product A Simple rate of return % 1 Product B 100 % Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period of Return Internal Rate Simple Rate of Return Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 6B Based on the simple rate of return, which of the two products should Lou's division accept? Accept Product A Accept Product B OReject both products