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 division's 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) $ 280,000 $ 480,000 Annual revenues and costs: Sales revenues $ 330,000 $ 430,000 Variable expenses $ 152,000 $ 202,000 Depreciation expense $ 56,000 $ 96,000 Fixed out-of-pocket operating costs $ 78,000 $ 60,000 The company's discount rate is 14%.