2. A laser cutting machine is purchased today for $23,000. There are no maintenance costs for...
2. A laser cutting machine is purchased today for $23,000. There are no maintenance costs for the next two years. Maintenance at the end of year 3 is expected to be $2,000, with each subsequent year’s maintenance costs exceeding the previous year by $1,000. An increase in revenues of $14,000 per year is expected during this time period. The planning horizon is 6 years. Draw the cash flow diagram.
Homework Answers
| Year | Outflow | Inflow |
| 0 | -23000 | 0 |
| 1 | 0 | 14000 |
| 2 | 0 | 14000 |
| 3 | -2000 | 14000 |
| 4 | -3000 | 14000 |
| 5 | -4000 | 14000 |
| 6 | -5000 | 14000 |
Cash flow diagram would be as follows:
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