If an alternative has monthly payments of 12000 a month for

If an alternative has monthly payments of $12,000 a month for three years with a purchase price of $75,000 at the end of year three, what would the cash flow diagram look like? Select the correct choice from each pair of answers.

$144,000 EOY 1 or $144,000 MOY 1

$144,000 EOY 2 or $144,000 MOY 2

$144,000 EOY 3 or $144,000 MOY 3

$75,000 EOY 3 or $75,000 MOY 3

Solution

$144,000 EOY 3 or $144,000 MOY 3

Cash flow = 12000*12 = $144000

Net cash flow = 144000*3 -75000

207000-75000 = 132000