Question

3. Seeing your need for a new car your sophomore year at UNCC, your parents decide to buy you an $18,000 car. They want you to make an initial deposit of $3000 and monthly payments of $300 to them for the privilege of driving the car. They also expect you to pay for routine maintenance (which works out to be about $150 paid every three months). At the end of one year, your parents are so proud of you for keeping up with your payments, maintenance and great grades in MEGR 2180, that they decide to return $4500 to you along with the title of the car. Draw the cash flow diagram for this scenario from YOUR point of view.

Answer 1

Statement showing Cash flows during the Year (Amounts in $ ) Particulars Parisulter to lie Months 6 0 1 2 te los Martin , Toledo 4 5 7 10 11 12 Outflows : Initial Deposit Monthly Payments Routine Maintenance (3,000.00) - (300.00) (300.00) (300.00) (150.00) (300.00) (300.00) (300.00) (300.00) - (150.00) - (300.00) (300.00) (300.00) (300.00) (150.00) - (300.00) (150.00) Inflows : Receipts from Parents (300.00) (450.00) (300.00) (300.00) 4500.00 4,050.00 (3,000.00) (300.00) (300.00) (450.00) (300.00) (300.00) (450.00) (300.00) *negative values represents cash outflows 6,750.00 4,500.00 Total Outflows Less: Total Inflows Net Cash outflow during the year 2,250.00 Cash Flow Diagram $ 4,500 Inflows Outflows $ 3,000 $ 300 $ 300 $ 450 $ 300 $ 300 $ 450 $ 300 $ 300 $ 450 $ 300 $ 300 $ 450

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