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 21% 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) $270,000 $480,000 Annual revenues and costs Sales revenues $320,000 $420,000 Variable expenses $148,000 $198,000 41,000 83,000 Depreciation expense Fixed out-ofpocket operating costs 77,000 57,000 The company's discount rate is 19%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period for each product. (Round your answers to 2 decimal places.) Product A Product B Payback period 2.84 years 2.91 years 2. Calculate the net present value for each product. (Round discount factor(s) to 3 decimal places.) Product A Product B Net present value