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Problem 7-23 (Algo) Comprehensive Problem [LO7-1, LO7-2, LO7-3, LO7-5, LO7-6] 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 A Product B Initial investment: Cost of equipment (zero salvage value) $ 340, 000 $ 540, 000 Annual revenues and costs: Sales revenues $ 380, 000 $ 460,000 Variable expenses $ 170, 000 $ 206, 000 Depreciation expense 68,000 $ 108, 000 Fixed out-of-pocket operating costs S 86, 000 S 66,000 The company's discount rate is 20%. Click here to view Exhibit 7B-1 and Exhibit 78-2, 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 Reg 4 Req 5 Reg 6A Req 6B Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product A Product B Payback period years yearsReq 1 Req 2 Req 3 Req Calculate the net present value for each product. Product A Product B Net present valueReq 1 Req 2 Req 3 Reg 4 Calculate the internal rate of return for each product as 12.3%.) Product A Product B Internal rate of return % %Req 1 Req 2 Req 3 Reg 4 Calculate the project profitability index for each product. Product A | Product B Project profitability indexCalculate 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 1 Req 2 Req 3 Reg 4 Req 5 Reg 6A Req 6B For each measure, identify whether Product A or Product B is preferred. Net Present Profitability Payback Internal Rate Simple Rate of Value Index Period of Return ReturnReq 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 6B Based on the simple rate of return, Lou Barlow would likely: Accept Product A Accept Product B OReject both products