Determining relevant cash flows for a new boat

Jan and Deana have been dreaming about owning a boat for some time and have decided that estimating its cash flows will help them in their decision process. They expect to have a discretionary annual income of $23,700. Their cash flow estimates for the boat purchase are as follows:

Negotiated price of the new boat	$70,000
Sales tax rate (applicable to purchase price)	6.6%
Boat trade-in	$0
Estimated value of new boat in 4 years	$40,400
Estimated monthly repair and maintenance	$790
Estimated monthly docking fee	$514

Using these cash flow estimates, calculate the following:

a. The initial investment.

b. Operating cash flow.

c. Terminal cash flow.

d. Summary of annual cash flow. (Note: Assume that Jan and Deana plan on selling the boat in 4 years.)

e. Based on their discretionary annual income, what advice would you give Jan and Deana regarding the proposed boat purchase?