Question 2. Alpha Ltd. is considering the introduction of new product. The company estimates that it can sell annually 10,000 units of this product at 12 per unit. The cash variable expenses to manufacture and sell the product are estimated at 8 per unit. It will also involve cash fixed cost of 7 8,000 per annum. The plant to manufacture the product is available for 3 1,50,000. Further, *50,000 will be needed for installation of the machine. The salvage value of the plant after its life of 10 years is estimated to be 10,000. A working capital investment of *25,000 would be required in the year of installing the plant. The company uses the straight line method (SLM) of depreciation on original cost of the asset ignoring salvage value of fixed assets. Assuming the same depreciation as allowable under income tax and 60% tax rate for this company, you are required to calculate : (i) Initial Investment (ii) Annual Net Cash Flows (iii) Terminal Cash Flows