The directors of The Cheddar Cheese Company Ltd are considering investing in a new packing machine. They have a choice of three suitable machines, each of which would cost £150,000 and each of which would have an estimated useful economic life of 5 years with no residual value. However, the net cash flows over that period (the difference between the cash coming in and going out each year) are expected to vary. The following table shows the budgeted annual net cash flows.

Which machine should the company purchase?

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Machine 1 Machine 2 Machine 3 Year 1 60,000 20,000 10,000 2 50,000 30,000 20,000 3 40,000 40,000 30,000 45 4 30,000 50,000 40,000 5 20,000 60,000 150,000