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 ProductAProduct B Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: 220,000 410,000 280,000 380,000 130,000 182,000 44,000 82,000 $ 73,000 60,000 Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs The company's discount rate is 14%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period 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 project profitability index for each product. 5. Calculate the simple rate of return for each product. 6a. For each measure, identify whether Product A or Product B is preferred 6b. Based on the simple rate of return, Lou Barlow would likely: Complete this question by entering your answers in the tabs below Req 1 Req 3 Req 4 Req 6A Req 2 Req 5 Req 68 Calculate the payback period for each product. (Round your answers to 2 decimal places.) Req 6B Req 6A Req 5 Req 4 Req 3 Req 2 Req 1 Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product B Product A years years Payback period Req 5 Req 2 Req 3 Req 1 Req 6A Req 4 Req 6B Calculate the net present value for each product. (Round your final answers to the nearest whole dollar amount.) Product B Product A Net present value KReq 1 Req 3 > Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 6B Calculate the internal rate of return for each product. (Round your answers to 1 decimal place i.e. 0.123 should be considered as 12.3%.) Product A Product B Internal rate of return KReq 2 Req 4 Req 3 Req 5 Req 6A Req 1 Req 2 Req 4 Req 6B Calculate the project profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Project profitability index Req 4Req 5Req 6A Req 1 Req 2 Req 3 Req 6B Calculate the simple rate of return for each product. (Round your answers to 1 decimal place i.e. 0.123 should be consi as 12.3%.) Product A Product B Simple rate of return Req 6B Req 5 Req 6A Req 4 Req 2 Req 3 Req 1 For each measure, identify whether Product A or Product B is preferred. Net Present Profitability PaybackInternal Rate Simple Rate of Period Return of Return Index Value Req 6B Req 6A Req 5 Req 4 Req 3 Req 2 Req 1 Based on the simple rate of return, Lou Barlow would likely: Accept Product A Accept Product B OReject both products Req 6B K Req 6A