Healthy Food Ltd is considering to invest in one of the two following projects to buy new machinery. Each option will last 5 years and have no salvage value at the end. The companys required rate of return for all investment projects is 7%. The cash flows of the projects are provided below.

	Machinery 1	Machinery 2
Cost	$396,000	$415,000
Future Cash Flows
Year 1	123,000	196,000
Year 2	194,000	204,000
Year 3	205,000	212,000
Year 4	215,000	217,000
Year 5	228,000	233,000

Required:

a) Identify which option of machinery should the company accept based on NPV method (Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification)

b) Identify which option of machinery should the company accept based on the simple payback period method if the firm maintains a policy that every investment project should recover the initial investment within 2 years.