A 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 divisions 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) $ 380,000 $ 575,000 Annual revenues and costs: Sales revenues $ 410,000 $ 490,000 Variable expenses $ 186,000 $ 218,000 Depreciation expense $ 76,000 $ 115,000 Fixed out-of-pocket operating costs $ 89,000 $ 69,000 The companys discount rate is 20%.

Use Excel to solve any time value of money problems. Required: 1. For each product calculate the:

Payback period, net present value, project profitability index, simple rate of return, measure, identify whether Product A or Product B is preferred? ****Please do it in Excel with the PV function so I can see the formulas for future problems. Thank you.