Ecoosa Organic Mattresses Manufacturers Limited (EOMML) is planning to purchase a new material handling machine for its manufacturing unit. The company is considering the following four mutually exclusive investments. The required payback period is five and a half years. The financial data regarding the four machines is given below (ignore taxes).

Machine/asset	Machine A	Machine B	Machine C	Machine D
$	$	$	$
Revenue	66,000	62,500	58,500	47,000
Operational costs	31,000	29,000	26,610	22,100
Depreciation	8,750	10,250	11,600	12,000
Interest	12,600	11,250	10,440	8,850
Cost of the machine	140,000	120,000	116,000	98,000
Machine life (years)	16	12	10	8

The manufacturing department has requested the chief financial offer (CFO) to evaluate the above investment opportunities using both payback period and internal rate of return methods. The CFO is seeking your help to calculate each machine's payback period, internal rate of return and determine appropriate hurdle rates. Required: (a) Calculate each machines payback period and state which alternative should be accepted based on this criterion. (6 marks) (b) Calculate each machine's internal rate of return (IRR), and using a hurdle rate of 25% state which of the alternatives is acceptable by this criteria. (10 marks) (c) Explain two probable circumstances in which EOMML is choosing ONE machine from among the four mutually exclusive investments. (6 marks)