Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five$-$

year perlod. His annual pay ralses are determined by his division's return on Investment $($ROI$),$ which has exceeded $19\%$ 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 $16\%.$

Click here to view Exhiblt $12$B$-1$ and Exhiblt $12$B$-2,$ to determine the appropriate discount factor using tables.

Required:

$1.$ Calculate the payback perlod 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.

$6$a$.$ For each measure, Identlfy 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?