S. Medical is evaluating the purchase of a new diagnostic equipment, which costs $1,200,000, has an expected life of 5 years, and an estimated pretax salvage value of $400,000. It is expected to generate $600,000 in its first year of use. In the same year operating expenses without depreciation are expected to be $270,000. The hospitals tax rate is 25%. The equipment falls into the MACRS five-year class for tax depreciation, given in the following table:

Year Allowance

1 0.20

2 0.32

3 0.19

4 0.12

5 0.11

6 0.06

Estimate S. Medical's Year 1 net cash flow