Lamont Artist Supply is considering replacing the equipment it uses to produce paint. The equipment would cost $1.37 million, have a 12-year life, and lower manufacturing costs by an estimated $304,000 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 28 percent. What is the net income from this proposed project?
How do you solve for this problem?