Mason Field Motors is evaluating a capital investment opportunity. This project would require an initial investment of $30,000 to buy one machine and $10,000 to buy the other machine (both machines are needed).

The project equipment will have a residual value at the end of its life of $3,000. The useful life of the equipment is 5 years. The new project is expected to generate additional net cash inflows of $12,000 per year for each of the five years. Mansfield Motors' required rate of return is 14%.

Present value of future annuity at 14% for 5 yrs is 3.4331

(Table A-4 Present Value Interest Factors for a One-Dollar Annuity Discounted)

Present value of future dollar at 14% on year 5 is..5194

(Table A-3 Present Value Interest Factors for One Dollar Discounted)

Requirement: Advise the Manson Mothers, if should make this investment or not?