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The Going Aircraft Company has an opportunity Interair will pay $19 second- and third-year costs at $50 million each. Interair will take delivery of the airplane during Year 4 and agrees to pay $20 million at the end of that year and the $60 million balance at the end of Year 5. The interest rate is 10%. to supply a large airplane to Interair, a foreign airline. million when the contract is signed and $10 million one year later. Going estimates its Which of the following cash flow diagram best represent the cash flow from the perspective of Going Aircraft Company?
Pick one of the following:
media%2Fc0c%2Fc0ca6e21-50a0-4e19-ba5a-f5

60M 19M 20M 10M 10% 50M 60M 50M 20M 10% 19M 60M 20M ,41 10% 19M soM
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Answer #1

Here, $19M , $10M , $20M and $60M are revenues at period 0 , 1, 4 and 5th year. And $50M is cost in period 2nd and 3rd year. In a cash flow diagram any upward arrow line shows revenue and downward arrow line shows costs.

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