Bruce Limited is considering the purchase of a new packaging machine. The cost of the machine is $2,500,000. The cost of capital is 12% and the following are excepted cost and revenue over the five year life of the project.

yeas	revenue	Operating Cost
1	$900,00	$600,000
2	$1,800,000	$600,000
3	$1,800,000	$700,000
4	$1,500,000	$800,000
5	$1,200,000	$500,000

The residual value of the machine after 5 years is expected to be $100,000. Advise the Directors of the Bruce Limited on the feasibility of the project using :

a) Pay back method

b) The discounted payback method

c) Net Present Value

d) Profitability Index

e) Internal Rate of Return ( IRR)