22. ABC Ltd. is considering purchase of a machine in replacement of an old one. Two models viz. MOLIN and SKODA are offered at prices of `22.50 Lakhs and `30 Lakhs respectively. Further particulars regarding these models are given below: (`in lakhs)

Particulars MOLIN SKODA Economic Life (years) 5 6 Scrap value at the end of economic life 2 2.5 Particulars MOLIN SKODA After tax annual cash inflows Year 1 5.00 6.00 2 7.50 8.00 3 10.00 10.00 4 9.00 12.00 5 8.50 10.50 6 — 9.50 Evaluate the two proposals under (i) Payback period (ii) NPV method. Which model would you recommend and why? [ICWA Inter June 2000]