Chapter 2, Problem 75P

To determine

On December 1, Al Smith purchased a car for $25000. He paid $7500 immediately and agreed to pay three additional payments of $8000 each (which includes principal and interest) at the end of 1,2 and 3 years. Maintenance for the car is projected at $1000 at end of the first year and $2000 at the end of each subsequent year. Al expects to sell the car at the end of the fourth year (after paying for the maintenance work) for $12,000. Using these facts, prepare a table of cash flows.