KCA University is considering the purchase of a new machine that is expected to save labour on an existing project. The estimated data for the two machines available on the market are as follows: Machine A Machine B $000 $000 Initial-cost (year 0) 120 120 Residual value of machines (Year 5) 20 30 Annual labour cost savings: Year 1 40 20 40 30 3 40 50 4 20 70 40 50 You are selected by the university management as their best student to advise them accordingly. Which machine will you influence the university to select? Assuming a cost of finance of 10 per cent p.a. REQUIRED a) Advise accordingly by using more than two of the best techniques of your own choice, Ignore taxation. (15 MARKS) b) Highlight real life examples where annuity due arise