Colors and More Is Considering Replacing the Equipment It Uses

Multiple Choice

Colors and More is considering replacing the equipment it uses to produce crayons.The equipment would cost $1.37 million,have a 12-year life,and lower manufacturing costs by an estimated $310,000 a year.The equipment will be depreciated using straight-line depreciation to a book value of zero.The required rate of return is 15 percent and the tax rate is 35 percent.What is the net income from this proposed project?

A) $18,508.75
B) $40,211.24
C) $66,441.67
D) $127,291.67
E) $136,709.48