Test bank Exercise 3 Rayburn Industries is evaluating the investment of $137,100 in a new packing machine that should provide annual cash operating inflows of $29,340 for 6 years. At the end of 6 years, the packing machine will be sold for $5,200. Rayburn’s required rate of return is 8%.

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(a)

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What is the machine’s net present value? (Round present value factor calculations to 4 decimal places, e.g. 1.2512 and final answer to 0 decimal places e.g. 58,971.)

Net present value $

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(b) Based on net present value, should Rayburn purchase the new packing machine?

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