Drake Corporation is reviewing an investment proposal. The initial cost is $104,600. 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 schedule below. 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 investments life.

Drake Corporation uses an 11% target rate of return for new investment proposals.

Investment Proposal Annual Annual Book Value Cash Flows Net Income $69,900 $46,000 $11,300 40,600 11,700 41,000 21,000 36,000 16,000 7,600 31,000 17,600 24,220 16,620