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Cost Analysis Economic Analysis: Develop a cash flow diagram

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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.

A: $144,000 EOY 1
B: $144,000 MOY 1

C: $144,000 EOY 2
D: $144,000 MOY 2

E: $144,000 EOY 3
F: $144,000 MOY 3

G: $75,000 EOY 3
H: $75,000 MOY 3

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Solution Summary

The solution explains whether to choose MOY or EOY with the calculations of respective amounts.

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Solution:

Conditions for EOY/MOY categorization:
EOY: To assume for investments or receipts (at year 0), for salvage value or disposal costs (at end-of-service life) unless otherwise noted.
MOY: To assume for all other expenditures unless ...

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