Calculate the present value of the machine

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Problem 1: Filbert owns a service station and has the opportunity to purchase a new machine for $30,000. After carefully studying projected costs and revenues, Filbert estimates that the machine will produce a net cash flow for $5,200 annually and will last for eight years. He determines that an interest rate of 14% is adequate for his business. Calculate the present value of the machine. Then determine if the purchase of this machine for $30,000 appears to be a smart decision.

Reference no: EM132951080

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