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 22% 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) $ 350,000 $ 550,000 Annual revenues and costs: Sales revenues $ 390,000 $ 470,000 Variable expenses $ 178,000 $ 210,000 Depreciation expense $ 51,000 $ 93,000 Fixed out-of-pocket operating costs $ 87,000 $ 67,000 The company’s discount rate is 20%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor using tables. Required:1. Calculate the payback period for each product.2. Calculate the net present value for each product.3. Calculate the internal rate of return for each product4. Calculate the project profitability index for each product. 5. Calculate the simple rate of return for each product.

In december of 2004, the company you own entered into a 20-year contract with a grain supplier for daily deliveries of grain to its hot dog bun manufacturing facility. the contract called for "10,000 pounds of grain" to be delivered to the facility at the price of $100,000 per day. until february 2017, the supplier provided processed grain which could easily be used in your manufacturing process. however, no longer wanting to absorb the cost of having the grain processed, the supplier began delivering whole grain. the supplier is arguing that the contract does not specify the type of grain that would be supplied and that it has not breached the contract. your company is arguing that the supplier has an onsite processing plant and processed grain was implicit to the terms of the contract. over the remaining term of the contract, reshipping and having the grain processed would cost your company approximately $10,000,000, opposed to a cost of around $1,000,000 to the supplier. after speaking with in-house counsel, it was estimated that litigation would cost the company several million dollars and last for years. weighing the costs of litigation, along with possible ambiguity in the contract, what are three options you could take to resolve the dispute? which would be the best option for your business and why?