Cost Analysis Economic Analysis: Develop a cash flow diagram

If an alternative has monthly payments of $12,000 a month for three years with a
purchase price of $75,000 at the end of year three, what would the cash flow diagram
look like? Select the correct choice from each pair of answers.

A: $144,000 EOY 1
B: $144,000 MOY 1

C: $144,000 EOY 2
D: $144,000 MOY 2

E: $144,000 EOY 3
F: $144,000 MOY 3

G: $75,000 EOY 3
H: $75,000 MOY 3

© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/cost-analysis-economic-analysis-develop-a-cash-flow-diagram-jt6f

Solution Preview

...wise noted.

The monthly payments of $12,000 would be shown as MOY for the entire year [12,000 * 12 = $144,000]. This MOY will be applicable for all the 3 years.

The purchase price of $75,000 at the end of Year 3 will be shown as EOY [for year ...