A company is considering whether to purchase a new machine. Machines A and B are available for R80,000 each. Earnings after taxation are as follows: Year Machine A (R) Machine B (R) 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 a discount rate of 10% by calculating the following Net Present Value for both machines, using

a) Manual calculations

b) The Excel function.

c) Based on your calculations, What would your recommendation to the company be?