A region vice-president for Allatoona, Inc. has an opportunity to manufacture and sell one of two new products for a four-year period. Her annual pay raises are determined by her regions return on investment (ROI), which has exceeded 15% each of the last ten years. She has computed the cost and revenue estimates for each product as follows:

	Product Alpha			Product Beta
Initial investment:
Cost of equipment (zero salvage value)	$	745,000		$	620,000
Annual revenues and costs:
Sales revenues	$	1,235,000		$	1,030,000
Variable expenses	$	720,000		$	617,500
Depreciation expense	$	204,000		$	176,000
Fixed out-of-pocket operating costs	$	270,000		$	212,500

The companys discount rate is 10%.

For each measure, identify whether Product Alpha or Product Beta is preferred based on your results.

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.