D8=1

Question 2 [Total 15 marks] Major overhaul expenses of US$ (5,000 + D8x100) each are anticipated for a large piece of earthmoving equipment. The expenses will occur at EOY (End of Year) 4 and will continue every three years thereafter up to and including year 13. The expected rate of return is (6 +D8% per year. (a)- Draw a cash-flow diagram. Use the convention mentioned in Lecture 3.- (6) What is the present equivalent of the overhaul expenses at EOY 3? Round off your final answer to the nearest hundred. (0) What is the future equivalent of the overhaul expenses at EOY 13? Round off your final answer to the nearest hundred