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Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell...

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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 19% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B Initial investmentt Cost of equipment (zero salvage value) Annual revenues and costst Sales revenue Variable expenses Depreciation xpense Fixed out-of-pocket operating costs s 190,000 400,000 270,000 370,000 128,000 178,000 $ 38,000 80,000 S 72,000 52,000 The company's discount rate is 17%. Click here to view Exhibit 138-1 and Exhibit 138-2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period for cach product. 2. Calculate the net present value for each product. 3. Calculate the internal rate of return for each product. . 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

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