Cullumber Corporation is reviewing an investment proposal. The initial cost is $$103,700.$

Estimates of the book value of the investment at the end of each year, the net cash flows for each

year, and the net income for each year are presented in the following schedule. All cash flows are

assumed to take place at the end of the year. The salvage value of the investment at the end of

each year is assumed to equal its book value. There would be no salvage value at the end of the

investment$$s life.

Investment Proposal

Year Book Value

Annual

Cash Flows

Annual

NetIncome

$1$ $$70,500$ $$45,200$ $$12,000$

$243,00040,50013,000$

$321,90036,00014,900$

$47,40030,40015,900$

$5024,19016,790$

Cullumber Corporation uses an $11\%$ target rate of return for new investment proposals.