This question is from chapter 12 of Managerial Accounting 16^th edition by Ray Garrison.

Problem 13-23 Comprehensive Problem [L013-1, LO13-2, LO13-3, LO13-5, LO13-6] 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 Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs 260,000 470,000 $ 310,000 410,000 $ 144,000 194,000 $ 52,000 94,000 $ 76,000 58,000 The company's discount rate is 18%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor using tables