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:

The company's discount rate is $18\%.$

Click here to view Exhibit $11$B$-1$ and Exhibit $11$B$-2,$ to determine the appropriate discount

factor$($s$)$ using tables.

Calculate the project profitability index for each product. $($Use the appropriate table

to determine the discount factor$($s$).$ Round your answers to $2$ decimal places.$)$

Calculate the simple rate of return for each product. $($Round percentage answer to $1$

decimal place. i$.$e$.0\mathrm{.}1234$ should be considered as $12\mathrm{.}3$ and use the appropriate

table to determine the discount factor$($s$).)$

$5$a$.$ For each measure, identify whether Product A or Product B is preferred.