1. Cortland Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net cash flows of $169,400. The equipment will have an initial cost of $605,000 and have a 5-year life. If the salvage value of the equipment is estimated to be $17,000, what is the annual net income? Ignore income taxes.

Multiple Choice

• $287,000

• $51,800

• $152,400

• $186,400