Question

Draw cash flow for the following:

1) You are planning to make eight equal deposits of $500 each in a saving account resulting in $5,601.69 one- time withdrawal amount at the end of ten years.

2) Millennials can save up to $19,500 per year in a 401 (k) account. If Nolan saves the full amount available to her ( i.e. $ 19,500 per year) with the first installment at the end of age 25, she figured she will have saved $2,35 million when she is 65 years old ( after 40 years of saving).

3) Suppose that annual income from a rental property is expected to start at $ 1,500 per year and decrease at a uniform amount of $ 75 each year after the first year for the 5-year expected life of the property.

4) You purchased a new car for $22,000. It will cost you $400 per year in maintenance fee for next 8 years. Also, you foresee an additional one-time cost of $800 for replacing tires at the end of 5th year. You estimated a selling price of $4,000 for your car at the end of 8th year.

Answer 1

To draw cash flows we can plot the cash inflows ( Postive cash flow) above the line and cash outflow(negative cash flow) below the line.

Positive cash 5661.69. 0 Period 2 3 n 5 2 lo 7 8 9 500 500 so goo soo soo soo oo Negative Cash Flow 235 million 2 28 27 28 65 A 1950 to 195ool 19500s 1 Soo 195oo. bos cost & Soo >500 A (3 1 2. 3 ih 5 75 75 75 75 9 doo! 1 2 3 ។ S 6 7 8 A 4 A 40o + A Yoo doh Чоф Mod 4 400 22 000 Yoo+80=1200