Problem 12-23 Comprehensive Problem (L012-1, LO12-2, L012-3, L012-5, L012-6] 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 22% each of the last three years. He has computed the cost and revenue estimates for each product as follows Product Product Initial Investment: cost of equipment (zero salvage value) $ 320,000 $570,000 Annual revenues and costs Sales revenues 5.400,000 $ 480,000 Variable expenses Depreciation expense 574.000 Fixed out of pocket operating costs $3,000 615,000 $ 100,000 $ 214,000 5 114,000 16 The company's discount rate is 20% Click here to view Exhibit 12B1 and Exhibit 120-2. 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 Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product B Product A years Payback period years Req 2> Complete this question by entering your answers in the tabs below. Reas Reg 6B Reg 1 Reg 5 Reg 3 Reg 4 Reg 6 Calculate the net present value for each product. (Round your final answers to the nearest whole dollar amount.) Product Product B Net present value Calculate the internal rate of return for each product. (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%) Product Product B Internal rate of return % % Calculate the project profitability index for each product. (Round your answers to 2 decimal places.) Product Product B Project profitability Index Calculate the simple rate of return for each product. (Round your answer to 1 decimal place l.e. 0.123 should be considered as 12.3%) Product A Product B 9 Simple rate of retum Reg For each measure, identify whether Product A or Product B is preferred. Net Present Value Profitability Index Payback Period Internal Rate Simple Rate ol of Return Return Reg 6B Reg 1 Reg 2 Reg 3 Reg 5 Req 6A Reg 4 Based on the simple rate of return, Lou Barlow would likely: Accept Product A Accept Product B Reject both products