Premium choice enterprice is considering purchasing an item of equipment which automate assembly and packaging of products therefore speeding up the production process

$.$

the company assessed an item of equipment called the tazr which recieved the following result :pay back

$3$

$$years$,$Discounted payback period

$3\mathrm{.}9$

$$years$,$ Net Present Value $

$120000$

$,$

Profitability Index

$1\mathrm{.}5$

$$ as the company consider making a purchase,the production Manager indicated he had recieved detail of an alternative item of equipment called the razr,which may prove much more attractive. the detail of this equipment was as follows purchase price $

$750000$

$$Annual cost saving year

$1$

$$$

$100000$

$,$

year

$2$

$$$ $

$200000$

$,$

year

$3$

$$$

$300000$

$,$

$$year

$4$

$$ $

$400000$

$,$

year

$5$

$$$

$250000.$

Scrap value $

$100000$

$$the company has a cost of capital of

$10$

$\%$

$.$

$$Calculate the following for equipment razr. the simple payback period?the discounted payback period? the net present value?the profitability index and explain which equipment should be selected give a reason for your anwser.