John now has $6000. In three months, he will receive a cheque for $2000 and another...
John now has $6000. In three months, he will receive a cheque for $2000 and another in 6 months for $1500. He must pay $900 at the end of each month (starting exactly one month from now). Starting in month 4 and every month thereafter he will pay $100. Draw a cash flow diagram illustrating all of these payments for a total of six-monthly periods. Include his cash on hand as a payment received at time 0. Also, draw a diagram showing the net values.
Homework Answers
All cash flows are depicted in the following diagram.
Net Cash Flow in Year 0=$6000
Net Cash Flow in Year 1=-$900
Net Cash Flow in Year 2=-$900
Net Cash Flow in Year 3=(2000-900)=$1100
Net Cash Flow in Year 4=(-900-100)=-$1000
Net Cash Flow in Year 5=(-900-100)=-$1000
Net Cash Flow in Year 6=(1500-900-100)=$500
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