Homework Answers
Initial cost and annual maint cost are outflows so they will be negative so they will be represented by downward arrow on cash flow diagram
a. Correct answer is cash flow given in C.
b.
X = 15000 * (A/P, 5%,5) + 1000 * (P/G, 5%,6)*(F/P, 5%,1)*(A/P, 5%,5) - 2000 * (A/F,5%,5)
= 15000 * 0.2310 + 1000 * 11.9680 * 1.05 *0.2310 - 2000 * 0.1810
= 6005.84 ~ 6006 (Nearest Dollar)
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