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The Terme Corporation is contemplating the purchase of new equipment, which may potentially increase revenues by 30%. Currently, sales are $770,000 per year and cost
The Terme Corporation is contemplating the purchase of new equipment, which may potentially increase revenues by 30%. Currently, sales are $770,000 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 $286,800. Ignoring income taxes, what is the estimated annual net operating income increase/decrease? Multiple Choice $231,000 increase $9,150 increase $71,700 decrease $80,850 decrease
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