An investment in new machines will be made and two different alternatives, A and B, have been developed.

Alt A Alt B Basic investment 200000 280000

Payments year 1 120000 140000 Payments year 1 60000 50000

Payments year 2 120000 140000 Payments year 2 60000 50000

Payments year 3 120000 140000 Payments year 3 60000 70000

Payments year 4 120000 140000 Payments year 4 60000 70000

Payments year 5 120000 120000 Payments year 5 60000 80000

Residual value 0 30000

Imputed rate of interest 10%

a) . Calculate the pay-off time of the investments without regard to the interest rate.

b) . Calculate the capital value of the investments by calculating the present value of the investments.

c) . Choose investment. Justify with relevant comparison methods.