Mr. Shazlin, the management accountant of Holly Enterprises. The company is considering an investment which is to purchase a new machine. Machines A and B are available for RM80,000 each. Earnings after taxation are as follows:

Year	Machine A	Machine B
1	24,000	8,000
2	32,000	24,000
3	40,000	32,000
4	24,000	48,000
5	16,000	32,000

The discount rate is determined at 10%.

Required:

(i) Compute the payback period for the alternatives. (4 marks)

(ii) Determine the accounting rate of return for the alternatives, based on the initial capital investment. (4 marks)

(iii) Compute the net present value of the alternatives. (4 marks)

(iv) Determine the profitability index for the alternatives. (3 marks)

(v) Would you recommend the project? Why? (4 marks)