Terry's Tiles is reviewing a capital investment proposal. The initial cost of the project and the net cash flows for each year are presented in the schedule below. It is estimated that

Q2: Terry's Tiles is reviewing a capital investment proposal. The initial cost of the project and the net cash ows for each year are presented in the schedule below. It is estimated that there would be no salvage value at the end of the investments life. Year Initial cost and carrying amount Annual net cash ow Annual net profit 0 $105 000 1 70 000 $ 50 000 $15 000 2 42 000 45 000 17 000 3 21000 40 000 19 000 4 7 000 35 000 21 000 5 O 30 000 23 000