Healthy Food Ltd. (the 'Company'), a small enterprise active in the catering sector, needs to replace one of its existing machines. The alternatives available on the market are the following:

Machine A Machine B Machine C

Capital Expenditure required¹ 110,000 100,000 50,000

Estimated useful life in years 5 4 4

Estimated cash flows after tax² 34,000 40,000 38,000

Estimated residual value at end of useful life 10,000 6,000 0

¹At beginning of first year

²All cash cost included, residual value, if any excluded

The Company's cost of capital is estimated at 8%.

Required:

Calculate, in relation to the potential investment in each of the three machines:

a) Payback period

b) Net present value

c) Profitability index

d) Which machine the Company should purchase, based on the three parameters computed above.