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 21% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B $ 270,000 $ 480,000 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs $ 320,000 $ 148,000 $ 54,000 $ 77,000 $ 420,000 $ 198,000 $ 96,000 $ 57,000 The company's discount rate is 19%. Click here to view Exhibit 7B-1 and Exhib:27B-2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period for each produ.. 2. Calculate the net present value ior each pro luct. 3. Calculate the internal rate of return for each product. 5. Calculate the project profitability index for each product. 5. Calculate the simple rate ofreiurn for each product. 6a. For each measure, identify whether Produt A or Product B is preferred. 6b. Based on the simple rate of return, Lou Banow would likely