All revenue and expenses other than depreciation will be received and paid in cash. The company uses a discount rate of 12% in evaluating all capital investments.

Bonlakuru company is trying to decide which of two new product lines to introduce in the coming year. The company requires a 12% return on investment. The predicted revenue and cost data for each product line follows: Product A Product B Unit sales 50,000 40,000 Unit sales price $15 $15 Direct materials $110,000 $140,000 $150,000 Direct labor $60,000 Other cash operating expenses $185,000 $130,000 New equipment costs $1,500,000 $760,000 0 0 Salvage Value Estimated useful life () 10 years 8 years The company has a 40% tax rate and it uses the straight-line depreciation method. Compute the net present value for each piece of equipment under each of the two product lines. Which, if either of these two investments is acceptable