TransITRI is a transportation company with a recent need of a new construction equipment at a first cost of $78,000 (Equation (1)), zero salvage value, and a cash flow before taxes (CFBT) per year t that follows Equation (2).                                            CFBT = $30,000 – 3,000t (for t = 1, 2, … T)                                       (1)                                            CFBT = - $78,000 (for t =0)                                                                  (2)Plot the cash flow diagram from year 0 (t=0) to year 9 (t=9)

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Asked Dec 11, 2019
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  1. TransITRI is a transportation company with a recent need of a new construction equipment at a first cost of $78,000 (Equation (1)), zero salvage value, and a cash flow before taxes (CFBT) per year t that follows Equation (2).

                                            CFBT = $30,000 – 3,000t (for t = 1, 2, … T)                                       (1)

                                            CFBT = - $78,000 (for t =0)                                                                  (2)

Plot the cash flow diagram from year 0 (t=0) to year 9 (t=9)

 

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Expert Answer

Step 1

The calculation of different cashflows for different years is shown in below table:

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1 Time Cashflow -78000 3 =A2+1 4 =A3+1 5 =A4+1 =30000-3000*A3 =30000-3000*A4 =30000-3000*A5 6 =A5+1 7 =A6+1 8 =A7+1 9 =A8+1 =30000-3000*A6 =30000-3000*A7 =30000-3000*A8 =30000-3000*A9 10 =A9+1 11 =A10+1 =30000-3000*A10 =30000-3000*A11 12

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Step 2

The resultant figures are s...

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1 Time Cashflow -S78,000.00 $27,000.00 2 3 $24,000.00 4 3 $21,000.00 4 $18,000.00 5 $15,000.00 $12,000.00 $9,000.00 $6,000.00 10 $3,000.00 11

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