1. A low-cost airline operating in South Africa is considering adding either Boeing 737-400 or Boeing 737-800 to its fleet. The following information is prepared for the economic evaluation. Either aircraft is to be used for 5 years and sold for the estimated salvage value. Assume the double-declining balance (200% bases) is used for tax purposes in this country and the airline's before-tax MARR is 6.00% per year.

Alternative	737-400	737-800
First costs	$390,000	$475,000
Annual operating revenue	$430,000	$555,000
Annual operating cost	$100,000	$150,000
Salvage value	$234,000	$234,000
Life, years	5	5

1. Select a machine on the basis of after-tax IRR
2. Select a machine on the basis of the payback period