Geometric Limited has the intention to purchase a new machine and has a choice between the following two machines:

A

B

Initial cost

Rs 112 500

Rs 110 000

Expected economic life

5 years

5 years

Expected disposal/residual value

Rs 8 500

0

Expected net cash inflows

End of: Year 1

Year 2

Year 3

Year 4

Year 5

Rs

0

36 000

24 000

46 000

43 500

Rs

35 000

35 000

35 000

35 000

35 000

The company estimates that its cost of capital is 7%.

Required:

(a) Calculate the payback period for both machines. (answers must be expressed in years, months and days) (2 marks)