At t = 0 (now), purchase blender for $62,000. At t = 0, install at cost of $8,000. At i = 1, savings generated by blender is $10,000. At t= 1, maintenance costs of $800. At t = 2, savings generated by blender are $12,000. At t= 2, maintenance costs of $1,200. At t = 3, savings generated by blender is $18,000. At t= 3, maintenance costs of $1,600. At t = 4, 5, 6, 7, 8, 9, 10, savings generated are $24,000 and maintenance is $4,000. At t = 10, the blender is sold for $8,000. At t = 10, blender removal costs are $1,600.
At t = 0 (now), purchase blender for $62,000. At t = 0, install at cost of $8,000. At i = 1, savings generated by blender is $10,000. At t= 1, maintenance costs of $800. At t = 2, savings generated by blender are $12,000. At t= 2, maintenance costs of $1,200. At t = 3, savings generated by blender is $18,000. At t= 3, maintenance costs of $1,600. At t = 4, 5, 6, 7, 8, 9, 10, savings generated are $24,000 and maintenance is $4,000. At t = 10, the blender is sold for $8,000. At t = 10, blender removal costs are $1,600.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Draw a cash flow diagram depicting the net cash flows associated with the purchase, operation, and disposition of a synthetic rubber blending machine. The cash flow components are shown below. Your CFD should have only one arrow at any given time period, reflecting the net of that period’s cash flows.
Transcribed Image Text:At t = 0 (now), purchase blender for $62,000.
At t = 0, install at cost of $8,000.
At i = 1, savings generated by blender is $10,000.
At t= 1, maintenance costs of $800.
At t = 2, savings generated by blender are $12,000.
At t= 2, maintenance costs of $1,200.
At t = 3, savings generated by blender is $18,000.
At t= 3, maintenance costs of $1,600.
At t = 4, 5, 6, 7, 8, 9, 10, savings generated are $24,000 and maintenance is
$4,000.
At t = 10, the blender is sold for $8,000.
At t = 10, blender removal costs are $1,600.
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