Draw the cash flow diagram for the project

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Reference no: EM132173475

Question: Equipment is bought for an initial cost of $20,000. Its operation will result in a net income of $6,000/ for the first year, increasing by $1,000 each year after year one. At the end of the fifth year the equipment is sold for $5,000. The prevailing interest rate for the next five years is estimated at 10%

a. Draw the cash flow diagram for this project.

b. For this project calculate

1. The NPW

2. The EUAW

3. The NFW

c. Another model of the equipment with the same initial price and annual cost brings in an income of $1,100 per month but has no salvage value. What is the rate of return for this project?

Reference no: EM132173475

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