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$)$ $ $312,450$ $ $510,000$

Annual revenues and costs:

Sales revenues $ $360,000$ $ $460,000$

Variable expenses $ $164,000$ $ $214,000$

Depreciation expense $ $62,000$ $ $102,000$

Fixed out$-$of$-$pocket operating costs $ $81,000$ $ $65,000$

The company$$s discount rate is $18\%.$