Five (5) years ago, your company purchased a skid-steer loader at the beginning of your construction project in order to save on labor costs. The original purchase price was $36,000. The project ends in two (2) years which coincides with the end of the useful life of the skid-steer. The annual capital cost is $6,780 at i = 10%, in line with the original estimate when the skid-steer was purchased. A) Draw the Cash Flow Diagram B) What is the salvage value of the skid- steer at the end of its useful life?

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
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Please answer a and b 

Five (5) years ago, your company purchased
a skid-steer loader at the beginning of your
construction project in order to save on
labor costs. The original purchase price was
$36,000. The project ends in two (2) years
which coincides with the end of the useful
life of the skid-steer. The annual capital cost
is $6,780 at i = 10%, in line with the original
estimate when the skid-steer was
purchased.
A) Draw the Cash Flow Diagram
B) What is the salvage value of the skid-
steer at the end of its useful life?
Transcribed Image Text:Five (5) years ago, your company purchased a skid-steer loader at the beginning of your construction project in order to save on labor costs. The original purchase price was $36,000. The project ends in two (2) years which coincides with the end of the useful life of the skid-steer. The annual capital cost is $6,780 at i = 10%, in line with the original estimate when the skid-steer was purchased. A) Draw the Cash Flow Diagram B) What is the salvage value of the skid- steer at the end of its useful life?
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