Assala Corporation manufactures products for the construction market. The company is considering purchasing one of the following computerized laser models for cutting steel. Assalas cost of capital is 12%. Its tax rate is 35%.

	Model A	Model B
Cost of the machine	AED 500,000	AED 600,000
Life of machine	5 years	5 years
Salvage (resale) value Year 5	AED 30,000	AED 40,000
Annual revenues	AED 140,000	AED 160,000
Annual operating expenses (including Depreciation)	AED 75,000	AED 85,000
Major repairs year 3	AED 18,000	AED 20,000

Required 1.

With using the NPV, IRR and payback criteria, the company has asked you to analyze the two options and make some recommendations.