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A company needs to purchase a photocopier for the next three years. The present one it owns is worth £3000 but will lose £1000 in value in each of the next 3 years: after this it will be worthless and useless.
The beginning-of-the-year value of its yearly operating cost is £5000, with this amount expected to increase by £1000 in each subsequent year the copier is used.
A brand new copier can be purchased at the beginning of any year for a fixed costs of £7500. The lifetime of a new copier is 5 years and its value decreases by £1000 in its first year of use and then by £1500 in each of the following year. The operating cost of a new copier is £2500 in its first year, with an increase of £750 in each subsequent year.
I need to produce a cashflow for the beginning of year 1, year 2 and year 3. Help?
I have got for beginning of the year 1- 7,000, 3250,4000, -3500
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