Solved: What is the present value of the retreading operation, Accounting Basics

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What is the present value of the retreading operation

Question:

Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $14,280. After estimating costs and revenues, Barney projects a net cash flow from the retreading machine of $2,900 annually for 8 years. Barney hopes to earn a return of 11% on such investments. What is the present value of the retreading operation? Should Barney Googal purchase the retreading machine?

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Accounting Basics: What is the present value of the retreading operation

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