ABC Corp. is planning to invest in a new machine to increase its production capacity to meet the growing demand for its products. The company has three machines under consideration, and the relevant details are given below. All sales are on cash. The corporate income tax rate is 35%. Interest on capital may be assumed to be 8%.

Particulars	Machine 1 (Rs)	Machine 2 (Rs)	Machine 3 (Rs)
Initial Investment	4,00,000	5,00,000	6,00,000
Estimated Annual Sales	7,00,000	8,00,000	9,00,000
Cost of Production:
Direct Material	60,000	70,000	80,000
Direct Labour	70,000	80,000	90,000
Factory Overhead	90,000	1,00,000	1,10,000
Administration Cost	30,000	35,000	40,000
Selling & Distribution Cost	20,000	25,000	30,000

The economic life of Machine 1 is 4 years, while it is 5 years for the other two. The scrap values are Rs. 50,000, Rs. 60,000, and Rs. 70,000 respectively. You are required to determine the most profitable investment based on the payback period method.