3. The Humboldt Manufacturing Company is considering buying a new machine. Machine A has an estimated useful life of five years, a purchase price of $250,000, and a residual value of $30,000. Machine B has an estimated useful life of 8 years, a purchase price of $350,000, and a residual value of $50,000. Machine B will also require a routine maintenance overhaul at the end of year 5 that will cost $5,000. The company controller has estimated average annual net income of $16,500 for Machine A and $25,000 for Machine B. The cash flows for the two machines are as follows: Machine A Machine B Year Net Cash Inflows Net Cash Inflows 1 $75,000 100,000 2 70,000 90,000 3 65,000 80,000 60,000 70,000 5 40,000 50,000 6 40,000 7 30,000 8 30,000 Compute the following for each machine (when necessary, round to two decimal places). a. Compute the payback periods. b. Compute the average rates of return on the investment. . Compute the Net Present Values assuming the company requires a 12% minimum rate of return. d. Which machine are you inclined to pick based on your answers to a, b, and ? Explain. . What is the problem with comparing the Net Present Values of these two machines and what other factors should be considered in this analysis? f. Assuming Machine B is sold at the end of year 5, which means that the routine maintenance overhaul would not need to be done. What residual value at the end of year 5 would be needed in order for the company to achieve its 12% rate of return? Show your computation. . Does your answer in (f) change your answer in (d)? Explain