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 $360,000 $530,000 Initial investment Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $400.000 $180,000 $ 72,000 $ 85,000 $ 510,000 $ 250.000 $ 106,000 $ 65,000 The company's discount rate is 19% Use Excel or a financial calculator to solve any time value of money problems 3. Calculate the project profitability index for each product (Round your answers to 2 decimal places. Product Product B Project profitability index 4. Calculate the simple rate of return for each product. (Round percentage answer to 1 decimal place. 1.e. 0.1234 should be considered as 12.3%) Product A Product B Simple rate of totum Sa For each measure identify whether Product or Product is preferred Not Present Value Profitability Index Payback Perlod Type here to search