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

By how much would Terme's annual gross profit increase if the investment is undertaken?

rev: 05_14_2018_QC_CS-127254

• $83,300
• $154,700
• $680,000
• $238,000