Calmex is situated in North India. It specializes in manufacturing overhead water tanks. The management of Calmex has identified a niche market in certain Southern cities that need a particular size of water tank, not currently manufactured by the company. The company is therefore thinking of producing a new type of overhead water tank. The survey of the company's marketing department reveals that the company could sell 120,000 tanks each year for six years at a price of '700 each. The company's current facilities cannot be used to manufacture the new-size tanks. Therefore, it will have to buy new machinery. A manufacturer has offered two options to the company. The first option is that the company could buy four small machines with the capacity of manufacturing 30,000 tanks each at '15 million each. The machine operation and manufacturing cost of each tank will be '535. Alternatively, Calmex can buy a larger machine with a capacity of 120,000 units per annum for '120 million. The machine operation and manufacturing costs of each tank will be '400. The company has a required rate of return of 12 per cent. Assume that the company does not pay any taxes. (10 Marks)