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: Initial investment: Product A Product B Cost of equipment (zero salvage value). Annual revenues and costs: $ 350,000 $ 550,000 $390,000 $470,000 Variable expenses $ 178,000 $ 70,000 $210,000 $110,000 Fixed out-of-pocket operating costs $ 87,000 $ 67,000 Sales revenues Depreciation expense 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. 6b. Based on the simple rate of return, which of the two products should Lou's division accept? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 68 Calculate the payback period for each product. (Round your answers to 2 decimal places.) Payback period Product A Product B 2.83 years 2.92 years Req 1 Req 2 > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 68 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 $ 26,440 $ 45,6200 < Req 1 Req 3 > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 68 Calculate the internal rate of return for each product. (Round your percentage answers to 1 decimal place i.e. 0.123 should be considered as 12.3%.) Internal rate of return Product A Product B 22.5 ( % 21.00 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Rej 5 Req 6A Req 6B Calculate the simple rate of return for each product. (Round your percentage answers to 1 decimal place i.e. 0.123 should be considered as 12.3%.) Simple rate of retur Product A Product B 28.41 30.6 % < Req 4 Req 6A > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 RAQ 6A Req 6B Net Present Profitability Index For each measure, identify whether Product A or Product B is preferred. Payback Period Value Product B Product A Product A Internal Rate of Return: Product A Simple Rate of Return Product A < Req 5 Req 6B > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req'68 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 < Req 6A Req 5B > Answer is complete but not entirely correct. 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 profitability index for each product. (Round your answers to 2 decimal places.) Profitability index Product Product A 1.16 B 1.12