An investment (equipment) costs $217,000 cash in its first year of operation and it is expected to have a residual value of $20,000 at the end of its four-year useful life. The equipment produces a product that is expected to generate annual sales of 3,500 units at a price of $50 per unit. The products manufacturing cost per unit is $42.00 including $8.40 per unit for factory depreciation.

a) Calculate this investments net annual cash flow for its first year of operation. b) Calculate this investments net annual cash flow for its fourth (final) year of operation.