Fletcher Corp. is considering the purchase of a new piece of equipment. The equipment will have an initial cost of $400,000, a 5-year life, and a salvage value of $75,000. If the accounting rate of return for the project is 10%, what is the annual increase in net cash flow? Ignore income taxes.
A. $40,000
B. $65,000
C. $25,000
D. $105,000
Answer: D
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