Manufacturing Limited manufactures widgets, the demand for which exceeds its capacity to produce. The limiting factor is the capacity of a production machine, which is due for replacement. The company has the option of replacing the machine with Machine A, which is similar to the existing machine, or Machine B, a more expensive machine with greater capacity. The pre-tax cash flows have been estimated and are shown below. The companys desired rate of return is 10% after tax. Tax is payable at the rate of 12.5% one year in arrears. Assume that tax is payable on all cash inflows and assume that no capital allowances are available on the machinery.. Machine A would be sold for 10,000 at the end of Year 5, whereas Machine B will have no sales value at the end of its useful life at the end of Year 5. Relevant data is as follows: (all amounts are in euro) Machine A Machine B Year 0 cost of machine (270,000) (400,000) Year 1 - 100,000 Year 2 50,000 140,000 Year 3 220,000 160,000 Year 4 140,000 170,000 Year 5 140,000 150,000 Requirement: (a) Using the information above and taking into account tax information, calculate the following for each machine. Detail all calculations that you use. (i) net present value (ii) discounted payback period (b) Discuss the relevance of the calculations performed to the decision to be taken.