Al purchased a car for $18,500. he paid $5,000immediately and agreeded to pay 3

Question

Al purchased a car for $18,500. he paid $5,000immediately and agreeded to pay 3 additional payments of $6,000each (which includes principle and interest) at the end of 1,2 and3 years. Maitenance for the car is projected at $1,000 at the endof the first year and $2,000 and the end of each subsequentyear. A l wants to sell the car at the end of the fourthyear(after paying for the maintenance work) for $7,000.
Using the facts, prepare a table of cash flows Al purchased a car for $18,500. he paid $5,000immediately and agreeded to pay 3 additional payments of $6,000each (which includes principle and interest) at the end of 1,2 and3 years. Maitenance for the car is projected at $1,000 at the endof the first year and $2,000 and the end of each subsequentyear. A l wants to sell the car at the end of the fourthyear(after paying for the maintenance work) for $7,000.
Using the facts, prepare a table of cash flows

Explanation / Answer

( Cash outflows ) / CashInflows

(23000.00)

Year Details

( Cash outflows ) / CashInflows

0 Cash down Payment (5000.00) 1 First instalment-                  6000 MaintenanceCosts              1000 (7000.00) 2 SecondInstalment               6000 MaintenanceCosts              2000 (8000.00) 3 ThirdInstalment                   6000 MaintenanceCosts              2000 (8000.00) 4 MaitenanceCosts                2000 5000.00 Sale ofCar                             7000 Total Cash Flows

(23000.00)

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