=+15 (Examination level) Hazel ple produces one of the components used in the manufac-

ture of car bumpers. The production manager is keen on obtaining modern equipment and he has come to you, the finance director, with details concerning two alternative machines, A and B.

The cash flows and other assumptions are as follows.

£000s

£000s

£000s Points in time (yearly intervals)

0 1

2 3

Machine A

-200

+220

+242 0

Machine B

-240

+220

+242

+266