A business firm contemplating the installation of labor saving machinery has a choice between two different models. Machine A will cost P36,500.00 while Machine B will cost P36,300.00. The repairs required for each machine are as follows:

Machine A : P1,500 at the end of 5^th year, P2,000 at the end of 10^th year

Machine B : P3,800 at the end of 9^th year

The machines are alike in all other aspects. If this firm is earning 7% return on its capital, which machine should be

purchase and what is the net saving? SHOW SOLUTION PLEASE