Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one oftwo new products for a ve year period. His annual pay raises are determined by his division's return on investment (ROI), which has exceeded 23% each ofthe 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) $ 388,666 $ 568,866 Annual revenues and costs: Sales revenues $ 358,666 $ 458,866 Variable expenses $ 168,666 $ 218,866 Depreciation expense 3. 68,666 $ 168,866 Fixed outofpocket operating costs $ 38,666 5 61,866 The company's discount rate is 16%. Required: 1. Calculate the payback period for each product. 2. Calculate the net present value for each product. 3. Calculate the protability index for each product 4. Calculate the simple rate of return for each product 5a. For each measure, identify whether Product A or Product B is preferred. 5b. Based on the simple rate of return, which of the two products should Lou's division accept