Shimano Company has an opportunity to manufacture and sell one of two new products for a five$-$year perlod. The company's tax rate

Is $30\%$ and its after$-$tax cost of capltal Is $14\%.$ The cost and revenue estimates for each product are as follows:

The equipment pertaining to both products has a useful life of five years and no salvage value. The company uses the stralght$-$IIne

depreclation method for financlal reporting and tax purposes. At the end of five years, each product's working capltal will be released

for Investment elsewhere within the company.

Click here to view Exhiblt $7$B$-1$ and Exhiblt $7$B$-2,$ to determine the approprlate discount factor$($s$)$ using tables.

Requlred:

Calculate the annual Income tax expense for each of years $1$ through $5$ that will arlse If Product A is Introduced.

Calculate the net present value of the Investment opportunity pertaining to Product A$.$

Note: Round your Intermedlate calculations and final answer to the nearest whole dollar.

Calculate the annual Income tax expense for each of years $1$ through $5$ that will arlse If Product B is Introduced.

Calculate the net present value of the Investment opportunlty pertaining to Product B$.$

Note: Round your Intermedlate calculations and flnal answer to the nearest whole dollar.

$5-$a$.$ Calculate the profitability Index for Product A and Product B$.$

Note: Round your flinal answers to $3$ decimal places

$5-$b$.$ Based on the profitability Index of the two products, which one should the company pursue?