A company is considering whether to purchase a new machine. Machines A and B are available for TZS 80,000 each. Earnings after taxation are as follows:

Year Machine A Machine B

TZS TZS 1 24,000 8,000 2 32,000 24,000 3 40,000 32,000 4 24,000 48,000 5 16,000 32,000

Required: Evaluate the two alternatives using the following: (a) Payback method (b) Rate of return on investment method (c) Net present value method. You should use a discount rate of 10%.