On December 1, Al Smith Purchased a car for $18,500. He paid $5,000 immediately and agreed to pay three additional payments of $6,000 each (which includes principal and interest) at the end of 1, 2, and 3 years. Maintenance for the car is projected at $1,000 at the end of the first year and $2000 at the end of each subsequent year. Al expects to sell the car at the end of the fourth year (after paying the maintenance work) for $7,000. Using these facts, prepare a table of cash flows.
|Cash Flow Table|
|1||Cash Outflow= $6000 installment + 1000 maintenance||($7000)|
|2||Cash Outflow= $6000 installment + 2000 maintenance||($8000)|
|3||Cash Outflow= $6000 installment + 2000 maintenance||($8000)|
|4||Cash Inflow= $7000 sale price – 2000 maintenance||$5000|