1. The present break-even sale of eskinol Company is P550, 000 per year. It is computed that if fixed expenses will go up by P60, 000, the sales volume required to break-even will also increase to P700, 000, without any change in the selling price per unit and on the variable expenses. Based on the information above, the variable expense ratio of the company is:

2. Trees hot Air is planning to buy airplanes cleaning equipment that can reduce airplanes wash service cost and other cash expenses by an average of P200, 000 per year. The new cleaning equipment will cost P600, 000 and will be depreciated for 5 years on a straight-line basis. No salvage value is expected at the end of the equipment's life. Income tax is estimated at 30% of income before tax. 

Determine the annual net cash flows for the proposed investment.