Alan Moore runs an AI company that involves 10 giant Behemoth artificial neural network computers. These computers have gotten old and need to be replaced. Mr. Moore is considering two options: 1) replace the existing machines with 10 new and updated Behemoth units (each will cost $800,000 and will not involve any additional operating costs), and 2) purchase 10 new Shikari machines that will cost $1.25 million each and will save $500,000 per year in operator costs. Note that Shikari units will last for 10 years, while Behemoth units are becoming obsolete and will last for 7 years. Financial analysts have produced a summary table (below).

Based on the internal rate of return (IRR) figures from the table, which machines should Mr. Moore buy, Behemoth or Shikari? Is this decision reliable? If not, why?

Based on the payback period figures from the table, which machines should Mr. Moore buy, Behemoth or Shikari? Is this decision reliable? If not, why?

Based on the net present value (NPV) figures from the table, which machines should Mr. Moore buy, Behemoth or Shikari? Is this decision reliable? If not, why?

Calculate the equivalent annual benefit (or cost) for each group of machines (Behemoth and Shikari). Based on such calculations, which machines should Mr. Moore buy, Behemoth or Shikari? Is this decision reliable? If not, why?

( In the table, consider -8 and -12.5 as a capital investment (cost) for each machine. Meanwhile, 47.5 (and 47) should be viewed as production costs. Both costs are to be accounted for when calculating the EAC. IMPORTANT: "Year: 1-7" in the table means that the cost in Year 1 is 47.5, in Year 2 is 47.5, ..., in Year 7 is 47.5, i.e., the production costs are given per year. )