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 23% 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: $ 300,000 $ 500,000 Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses $ 350,000 $ 160,000 $ 450,000 $ 210,000 Depreciation expense $ 100,000 $ 60,000 $ 80,000 Fixed out-of-pocket operating costs $ 61,000 The company's discount rate is 16%. Click here to view Exhibit 7B-1 and Exhibit 7B-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 2 Req 3 Req 4 Req 5 Req 6B Req 6A Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product A Product B Payback period years years +A 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 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 % % Calculate the project profitability index for each product. (Round your answers to 2 decimal places.) Product A Product B Project profitability index Calculate the simple 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 Simple rate of return % % For each measure, identify whether Product A or Product B is preferred. Net Present Profitability Value Index Payback Period Internal Rate Simple Rate of of Return Return Based on the simple rate of return, Lou Barlow would likely: OAccept Product A OAccept Product B Reject both products