Addison Corp is considering the purchase of a new piece of equipment. The equipment will have an initial cost of $696,000, a 3 year life, and no salvage value. If the accounting rate of return for the project is 10%, what is the annual increase in net cash flow? Ignore income taxes.

a. $162,400

b. $301,600

c. $232,000

d. $69,600

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 $110,000. The equipment will have an initial cost of $444,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $75,000, what is the annual net income? Ignore income taxes.

a. $185,000

b. $184,000

c. $35,000

d. $36,200