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Rayburn Industries is evaluating the investment of $140,000 in a new packing machine that should ...

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acwiles:
Rayburn Industries is evaluating the investment of $140,000 in a new packing machine that should provide annual cash operating inflows of $30,000 for 6 years. At the end of 6 years, the packing machine will be sold for $5,000. Rayburn's required rate of return is 8%.

Required:

a.What is the machine's net present value?b.Based on net present value, should Rayburn purchase the new packing machine? Why or Why not?
c.List two qualitative items that Rayburn should consider in the decision to purchase the new machine.

Spike8502:
a.Present value of an annuity$30,000 × 4.6229$138,687Present value of $15,000 × 0.63023,151Present value of initial investment(140,000)Net present value$    1,838
b. Rayburn should purchase the new packing machine because the net present value is positive.

c. (Answers will vary) One qualitative consideration might be the impact on the employees. If the new packing machine will result in the layoff of employees, morale of the other employees may be negatively affected. Other considerations might be the impact on the environment, the economy due to fewer jobs available, and safety features of the new machine.

Mr Meme:
Thank you

Mr Meme:
thank you

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