The Terme Corporation is contemplating the purchase of new equipment, which may potentially increase revenues by 35%. Currently, sales are $680,000 per year and cost of sales are 65% of sales. The equipment is expected to last for 4 years with no residual value. The cash outflow expected at the beginning of the year is $283,200.

rev: 05_14_2018_QC_CS-127254

Ignoring income taxes, what is the estimated annual net operating income increase/decrease?

• $70,800 decrease
• $83,300 decrease
• $12,500 increase
• $238,000 increase