Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
Question
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Chapter 5, Problem 1P
To determine

Calculate the net cash flow.

Expert Solution & Answer
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Explanation of Solution

Table 1 shows the net cash flow. Total revenue is $450,000. (45×0.4×5,000×5) which is known as inflow. Net cash flow (NCF) is obtained by subtracting the outflow from inflow.

Table 1

YearInflowOutflowNCF
0 500,000-500,000
1450,000175,000275,000
2450,000175,000275,000
3450,000175,000275,000
4450,000175,000275,000
5450,000175,000275,000
6450,000175,000275,000
7450,000175,000275,000
8450,000175,000275,000

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