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 20% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B nitial investment Cost of equipment (zero salvage value) $250,000 Annual revenues and costs Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs 460,000 $300,000 400,000 $140,000 $ 190,000 50,000 $ 92,000 $ 75,000 55,000 The company's discount rate is 18%