Joshua & Nomndevu Trading intends to invest in new machinery which is believed to be more efficient and could save operational costs for the company. The manufacturer of these specialized machinery has offered the following two machines:

	Machines
A	B
Cost	R100 000	R80 000
Expected economic life	5 years	5 years
Expected return on investment	10%	10%
Net annual cash inflows	R	R
Year 1	30 000	25 000
Year 2	35 000	30 000
Year 3	45 000	20 000
Year 4	30 000	18 000
Year 5	35 000	25 000

Question:

1. Calculate the following for each machine:
   • Payback period
   • Discounted payback period
   • Average Return
   • Accounting Rate of Return
   • Net present value
   • Internal rate of return
   • Profitability index
2. Advise which machine should be purchased. Conclude on each of the above techniques and provide reasons for your answers.