Timothy purchased a car for $21,500 on the first day of December. He immediately paid $8000 and also agreed to pay three consecutive payments of $7000 each, including principal and interest charges at the end of the first 3 years. Maintenance for the car is said to be at $2000 at the end of the first year and $3000 at the end of each subsequent year. The car is expected to be sold at the end of the fourth year (after paying for the maintenance work) for $9000. Given these facts, prepare a table of cash flows. Find also the year in which the revenue is highest.
Timothy purchased a car for $21,500 on the first day of December. He immediately paid $8000 and also agreed to pay three consecutive payments of $7000 each, including principal and interest charges at the end of the first 3 years. Maintenance for the car is said to be at $2000 at the end of the first year and $3000 at the end of each subsequent year. The car is expected to be sold at the end of the fourth year (after paying for the maintenance work) for $9000. Given these facts, prepare a table of cash flows. Find also the year in which the revenue is highest.
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 50P
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Transcribed Image Text:Timothy purchased a car for $21,500 on the
first day of December. He immediately paid
$8000 and also agreed to pay three
consecutive payments of $7000 each,
including principal and interest charges at the
end of the first 3 years. Maintenance for the
car is said to be at $2000 at the end of the
first year and $3000 at the end of each
subsequent year. The car is expected to be
sold at the end of the fourth year (after paying
for the maintenance work) for $9000. Given
these facts, prepare a table of cash flows. Find
also the year in which the revenue is highest.
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