Chapter 12 problem 1 (please help with 1, 5 and 6A). the rest I have figured out.

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 divisions return on investment (ROI), which has exceeded 23% 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)	$	290,000		$	490,000
Annual revenues and costs:
Sales revenues	$	340,000		$	440,000
Variable expenses	$	154,000		$	206,000
Depreciation expense	$	58,000		$	98,000
Fixed out-of-pocket operating costs	$	79,000		$	59,000

The companys discount rate is 15%.

Required:

1. Calculate the payback period for each product.

2. done

3. done

4. done

5. Calculate the simple rate of return for each product.

6a. For each measure, identify whether Product A or Product B is preferred.

6b. done