Major overhaul expenses of $5,000 each are anticipated for a large piece of earthmoving equipment. The expenses will occur at EOY four and will continue every three years thereafter up to and including year 13. The interest rate is 12% per year.
a. Draw a cash-flow diagram.
b. What is the present equivalent of the overhaul expenses at time 0?
c. What is the annual equivalent expense during only years 5-13?