Scenario: Trojan, LLC is contemplating a $425,000 investment of equipment that they feel can add $175,000 in revenues in Year #1, and increase by 2.5% each year thereafter. They estimate variable expenses at 10% of Sales and additional fixed costs would be approximately $50,000 per year. The equipment should last 5 years and have a salvage value of $35,000 at the end of its life. They've decided to use straight line depreciation over the equipment life.