17. Company X is forced to choose between machines A and B. The two machines are designed differently but have identical capacity and do exactly similar job. Machine A costs `3,00,000 and will last for 3 years. It costs `80,000 per year to run. Machine B costs `2,00,000 and will last for 2 years. It costs `1,20,000 per year to run. These are real cash flows. The costs are forecasted in rupees of constant purchasing power. Ignore tax.

Opportunity cost of capital is 10%. Which machine X should buy?

[C.A Final May 2000 (Adapted)]