Question

The Palm Tree Café is considering to buy a new Coffee blending machine.

A relative of the manager suggests her an offer of a well-known brand:

Pricing at $300,000, it would generate an income of $90,000 annually. The offer includes the first-year maintenance service free of charge. So, the first annual maintenance service charge of $30,000 would be payable at the beginning of the second year.  Its life span can last for 6 years.  The salvage value would be $3,000.

Draw a cash flow diagram for the offer.

Answer 1

in the graph the X - Axis values 1 - 7 represents year 0 to 6