Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $800,000. The net cash flows estimated for the two proposals are as follows: Year Net Cash Flow Diamond Core Drill Net Cash Flow Hydraulic Excavator 1 $306,000 $348,000 2 261,000 323,000 3 261,000 320,000 4 254,000 314,000 5 181,000 6 133,000 7 133,000 8 133,000 The estimated residual value of the diamond core drill at the end of Year 4 is $290,000.