Problem 13-23 Comprehensive Problem (LOI 3-1, LO13-2, LO13-3, LO13-5, L013-6] 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 17% 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: Sales revenues Variable expenseis Depreciation expense Fixed out-of-pocket operating costs 180,000 390,000 $ 260,000 360,000 124,000 174,000 $ 36,000 78,000 $ 71,000 50,000 The company's discount rate is 15%. 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: Req 1 Req 2 Req 3 Req 4 Req 5 Req 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 Req 3 Req 4 Req 5 Req 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 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 Req 1 Req 2 Req 3 Req 4Req 5 Req 6A 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 2 Req 3 Req 4 Req 5 Req 6A Req 6B Req 1 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 Req 5 Req 6A Req 6B Req 1 Req 2 Req 3 Req 4 For each measure, identify whether Product A or Product B is preferred. Net Present Profitability Payback Internal Rate Simple Rate of Period of Return Return Value Index Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 6B Based on the simple rate of return, Lou Barlow would likely: OAccept Product A Accept Product B OReject both products