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Lou Barlow, a divisional manager for Sage Company has an opportuniyt to manufacture and sell one of two new products for a five -year period.

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Lou Barlow, a divisional manager for Sage Company has an opportuniyt 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 18% 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) $170.000.00 $380,000.00 Annual Revenues and Costs: Sales Revenues $250.000.00 $350.000.00 Variable Expenses $120,000.00 $170,000.00 Depreciation Expenses $34.000.00 $76,000.00 Fixed out-of -pocket operating costs $70.000.00 $50.000.00 The company's discount rate is 16%

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