Question

Create a cash fiow diagram for the following scenario by entering t the correct location of the corresponding parameter in the cash flow diagram. For example, A would be the location of a positive cash flow at time O r denotin An investment of $10,000 at time O revenue of $5.220 for two years a market recovery value of $2.000 expenses will be $3,000 each year operating and maintaining the project will produce uniform annual , and have at the end of year 2. Annual for A BCD E L M N O P Q R S T U V

Answer 1

All arrows pointing toward the timeline are cash outflows. All arrows pointing away from timeline are cash inflows. So:

Investment of $10,000 at time 0 L will produce uniform revenue of $5,220 for two years B and C, and have a market recovery value of $2,000 N at end of two years. Annual expenses will be $3,000 each year M, N for operating and maintaining.

NOTE: In year 2 there are 2 cash inflows: Revenue ($5,220) and market recovery value ($2,000). But there is only 1 arrow pointing away from the timeline in year 2 (N), so it is entered for both cases.