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Math Help - Please double check I read the question correctly

  1. #1
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    Please double check I read the question correctly

    For the following problem
    ******************
    Land is bought for $45000 with buying expenses of $2180, and interest rate is 9% p.a. The land is kept for 4 years with annual costs of $500, and sold for $105000 at the end of the 4th year (selling expenses are $5000).
    ***********************
    I assume that the the cash flow time line is

    -45000,-500,-500,-500,99500
    Since I assume the annual costs come at the end of each year.
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  2. #2
    Junior Member Serena's Girl's Avatar
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    Just missed a little detail

    The cash flow timeline is almost correct. However, for year 0, the buying expenses shouldn't have been neglected.

    The timeline should be:

    Year 0: -45000 - 2180 = -47180

    Year 1: -500

    Year 2: -500

    Year 3: -500

    Year 4: -500 + 105000 - 5000 = 99500
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  3. #3
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    Thanks
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