5. The Running for Life Centre is considering replacing its treadmills and is faced with a choice between two models: the Track model costing 800 per machine and the Pro model costing 1,400 per machine. The Pro model is sturdier and the cost of maintenance per machine is 50 per year. The Track model is less robust and requires more maintenance costing 75 per machine per year. The Track model is also less durable. The Running for Life Centre estimates that it would need to replace the Track machines after 3 years of use and that it would need to buy 30 machines to ensure that enough are working at any particular time. The Pro model would last 4 years and only 25 machines would be needed. All other revenue and costs for the Running for Life Centre would remain the same. The required discount rate for this project is 10%.

Required: a) On the basis of the information provided, which machine should the Running for Life Centre buy? Explain.

[15 marks] b) What other information would you consider before taking a decision? [5 marks] [Total 20 Marks]