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 $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?

a) $18,508

b) $40,211

c) $98,366

d) $123,391

e) $136,679