Robert Baka owns a service station and has the opportunity to purchase a car-wash machine for $30,000.
Question:
Robert Baka owns a service station and has the opportunity to purchase a car-wash machine for $30,000. After carefully studying projected costs and revenues, Baka estimates that the car-wash machine will produce a net cash flow of $5,200 annually and will last for eight years. He determines that an interest rate of 14 percent is adequate for his business. Calculate the present value of the machine to Baka. Does the purchase appear to be a smart business decision?
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Mehwish Aziz
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