Global Manufacturing Ltd needs to replace one of its drill presses owing to ever$-$increasing

breakdowns and escalating maintenance costs. Joe, the factory manager, identified two possible

replacement options for management to consider. Only one new drill press is needed. Joe,

together with the financial manager, prepared the table of relevant cash flows below for each of

the alternatives. The financial manager calculated the company's cost of capital to be $14\%.$

Drill press A will require an initial investment of R$580000$ and drill press B$,$ R$890000.$

Required:

$5\mathrm{.}1$ Apply the net present value $($NPV$)$ capital budgeting technique to determine the NPVs

for the two drill presses.

$5\mathrm{.}2$ Recommend to Global's management which one of the two drill presses should be

considered as the replacement and substantiate your decision.