Draw a cash flow diagram depicting the net cash flows associated with the purchase, operation, and disposition of a synthetic rubber blending machine. The cash flow components are shown below. Your CFD should have only one arrow at any given time period, reflecting the net of that period’s cash flows. At t = 0 (now), purchase blender for $62,000.At t = 0, install at cost of $8,000.At i = 1, savings generated by blender is $10,000.At t= 1, maintenance costs of $800.At t = 2, savings generated by blender are $12,000.At t= 2, maintenance costs of $1,200.At t = 3, savings generated by blender is $18,000.At t= 3, maintenance costs of $1,600.At t = 4, 5, 6, 7, 8, 9, 10, savings generated are $24,000 and maintenance is$4,000.At t = 10, the blender is sold for $8,000.At t = 10, blender removal costs are $1,600.

Year Cash Flow Working 0 -70,000 (-)62000(-)8000 1 9200 10,000-800 2 10800 12,000-1200 3…

Answered: At t = 0 (now), purchase blender for…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EB: Caduceus Company is considering the purchase of a new piece of factory equipment that will cost...

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Draw a cash flow diagram depicting the net cash flows associated with the purchase, operation, and disposition of a synthetic rubber blending machine. The cash flow components are shown below. Your CFD should have only one arrow at any given time period, reflecting the net of that period’s cash flows.

At t = 0 (now), purchase blender for $62,000.
At t = 0, install at cost of $8,000.
At i = 1, savings generated by blender is $10,000.
At t= 1, maintenance costs of $800.
At t = 2, savings generated by blender are $12,000.
At t= 2, maintenance costs of $1,200.
At t = 3, savings generated by blender is $18,000.
At t= 3, maintenance costs of $1,600.
At t = 4, 5, 6, 7, 8, 9, 10, savings generated are $24,000 and maintenance is
$4,000.
At t = 10, the blender is sold for $8,000.
At t = 10, blender removal costs are $1,600.

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