=+11 The Borough Company is to replace its existing machinery. It has a choice between two new types of machine having different lives, The machines have the following costs:

Points in time (yearly intervals)

Machine X Machine Y 0

Initial investment

£20,000

£25,000 1

Operating costs ES,000

£4,000 2

Operating costs

£5,000

£4,000 3

Operating costs

£5,000

£4,000 4

Operating costs

£4,000