Pittsford Ltd. operates under ideal conditions of uncertainty and its cash flows depend on the weather. On January 1, 2020, Pittsford acquires equipment that will last for two years at which time it will have zero salvage value. The equipment purchase was financed by issuing common shares. The probability that the weather is rainy is 0.3 and the probability that the weather is dry is 0.7, for each year. If the weather is rainy the cash flows are $2,100 in 2020 and $2,700 at the end of 2021. If it is dry the cash flows are $600 in 2020 and $900 at the end of 2021.The interest rate in the economy is fixed at 6%. If the weather is rainy, Pittsford pays a dividend of $150.

In 2020 the weather is rainy and in 2021 the weather is dry. Assume that investors are risk-neutral.

a) What is Net Income for the year ending December 31, 2020? (5 points)

b) What is the amortization expense recorded for the year ending December 31, 2020?(5 points)

c) What is retained earnings at December 31, 2020? (5 points)