Santos Golf Products is considering whether to upgrade its equipment. Managers are considering two options. Equipment manufactured by Smith Inc. costs $ $800000$ and will last five years and have no residual value. The Smith equipment will generate annual operating income of $ $156000.$ Equipment manufactured by Little Stream Limited costs $ $1,150,000$ and will remain useful for six years. It promises annual operating income of $ $235750,$ and its expected residual value is $ $100000.$

Which equipment offers the higher$$ ARR?