PKP Sdn. Bhd. must choose between two machines, X and Y. The purchasing costs today

and maintenance expenses at the end of every year for these two machines are given as follows: j Year Machine X Machine Y

0 -RM2,000,000 -RM2,500,000

1 -RM200,000 -RM210,000

2 -RM200,000 -RM210,000

3 -RM200,000 -RM210,000

4 - -RM210,000

5 - -RM210,000

All cash ows occur at year-end and the discount rate is 12%. Assume that revenues are the same regardless of the machine, and assume that whichever machine the company chooses, it will continue to buy that model forever. Which machine should the company choose? Tax rate is 24% and simplied straight line is used as the method of depreciation.