Question

I need to make a cash flow chart for two model of cars and the end result i am looking for is the value of the car at the end of 5 years when it will be traded in.

the first model is a 2020 accord ex-l: total price of car $30,420, interest rate at 4%, fees and taxes is $5,400, depreciation of the vehicle after 5 years is $17,146

2017 Honda Accord EX-L: the total price is $15,000, fees and taxes is $1,989, interest rate is 4%, depreciation of the vehicle after 5 years is $7,512

Answer 1

Calculation of cost of the car at the end of the 5th year:

Particulars	ex-l	EX-L
Total price of car (A)	30,420 (Down arrow)	15,000 (Down arrow)
Interest (B)	(30420*4%*5) =6084 (Down arrow)	(15,000*4%*5) = 3000(Down arrow)
Taxes and fees (C)	5400 (Down arrow)	1989 (Down arrow)
Depreciation (D)	17,146 (No effect on Cash)	7,512 (No effect on Cash)
Value of the Car after 5 years (A+B+C-D)	24,758	12477

*Fees and taxes:

Assumed that no credit has taken and hence Fees and taxes will be added to the cost.

Interest:

Since no information is given like for how many years interest will be paid and hence interest of one year considered and the same added to the cost. As per the comment given by the student interest is taken first 5 years.