be fore evaluating the economic merits of a proposed investment' XYZ Corporation insists that its engineers develop a cash-flow diagram of the proposal. An investment of 10000 can be made hat will produce uniform annual revenue of 5310 for five years and then have a market (recovery) value of 2000 at the end of year five Annual expenses will 3000 at the end o each year for operating and maintaining the project. Draw cash-flow diagram for the five-year life of the project. Use the Corporation's view point.
Solution
As shown in the figure below, the initial investment of 10000 And Annual expenses of 3000 are cash out flows, while annual revenues and the market value are cash inflows