1. Ridha Co plans to replace an existing machine and must choose between two machines. Machine 1 has an initial cost of OMR 200,000 and will have a scrap value of OMR 25,000 after four years. Additional maintenance cost of machine 1 is OMR 20,0000

Machine 2 has an initial cost of OMR 225,000 and will have a scrap value of OMR 50,000 after three years. Additional maintenance cost of machine 1 is OMR 25,0000. Ridha Co. can sell the existing machine for OMR 45,000

Annual earnings of the two machines are as follows:

Year	1	2	3	4
Machine 1 (OMR per year)	75,000	65,000	50,000	45,000
Machine 2 (OMR per year)	85,000	70,000	55,000