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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 24% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 330,000 $ 515,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 370,000 $ 168,000 $ 66,000 $ 82,000 $ 470,000 $ 218,000 $ 103,000 $ 68,000 The company's discount rate is 15%. Click here to view Exhibit 128-1 and Exhibit 12B-2, to determine the appropriate discount factor using tables. Req 1 Reg 2 Req3 Reg 4 Req 5 Calculate the payback period for each product. (Round your answers to 2 Product A Product B Payback period years years Req 1 Req 2 Reg 3 Re Req 4 Calculate the net present value for each product. (Round your f Product A Product B Net present value Req 1 Req 2 Reg 3 Req 4 Calculate the internal rate of return for each product. ( as 12.3%.) Product A Product B % Internal rate of return % Req 1 Reg 2 Req 3 Req 4 Calculate the project profitability index for each produ Product A Product B Project profitability index Req 2 Reg 1 Reg 3 R Reg 4 Calculate the simple rate of return for each product. (Round y as 12.3%.) Product A Product B Simple rate of return % %

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