FIN1013 Financial Analysis and Budgeting Chapter \#11 - Capital Budgeting Exercise Fitness Company is considering the purchase of a new fitness training machine. Management is choosing between two possible new machines: Model A and Model B. Either machine would cost $50,000, and each machine has an estimated useful life of 5 years. Neither machine will have a residual value at the end of its useful life. The annual NET cash inflows (ie. total annual cash inflows generated from machine minus total annual cash outflows required to operate machine) over the next five years are as follows: Required: 1.) Compute the Payback Period for each machine. 2.) Compute the Net Present Value of each machine. The company's minimum required rate af return is 10%. Based on the Net Present Value calculations, are these attractive investments? Which machine should be purchased