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 25% 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) Annual revenues and costs: $ 340,000 $ 540,000 Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 390,000 $ 176,000 $ 68,000 $ 84,000 $ 490,000 $ 226,000 $ 108,000 $ 64,000 The company's discount rate is 18%. Req 1 Req 2 Req 3 Req 4 Reg 5 Reg 6A Req 6B Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product A Product B Payback period years years Req 1 Req 2 Reg 3 Req 4 Reg 5 Reg 6A Req 6B 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 Reg 1 Req 2 Reg 3 Reg 4 Req 5 Req 6A Req 6B 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%.) Product A Product B Internal rate of return % Req 1 Req 2 Reg 3 Req 4 Req 5 Req 6A Req 6B Calculate the profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Profitability index Req 1 Req 2 Req 3 Req 4 Req 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%.) Product A Product B Simple rate of return % % Req 1 Req 2 Reg 3 Req 4 Req 5 Req 6A Req 6B For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period Internal Rate Simple Rate of of Return Return Req 1 Req 2 Reg 3 Req 4 Req 5 Req 6A Reg 6B 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