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: Product A Product B Initial investment Cost of equipment (zero salvage value) $200,000 $410,000 Annual revenues and costs: Sales revenues $280,000 $380,000 Variable expenses $132,000 $ 182,000 Depreciation expense $ 40,000 $ 82,000 Fixed out-of-pocket operating costs $ 73,000 $ 53,000 The company's discount rate is 18%. Use Excel or a financial calculator to solve any time value of money problems. Required: 1. Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product A years Product B years Payback period 2. Calculate the net present value for each product. (Round answers to the nearest dollar.) Product A Product B Net present value 3. Calculate the project profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Project profitability index 4. Calculate the simple rate of return for each product. (Round percentage answer to 1 decimal place. I.e. 0.1234 should be considered as 12.3%) Product A Product B Simple rate of return 5a. For each measure, identify whether Product A or Product B is preferred. Net Present Profitability Value Index Payback Period 5b. Based on the simple rate of return, Lou Barlow would likely: Accept Product A Accept Product B Reject both products