Q.6 Lesego Ltd is considering an investment in a new machine for the production of a new product, X. There are two possibilities, Machine A and Machine B. Both product X and the machine would have an expected life of five years. The following information is available: Product X Selling price $50 Variable cost 32 Increase in fixed overhead (excluding depreciation of the new machine) is $90,000 per year. Year 10,000 15,000 20,000 20,000 5,000 Sales units 1 2 3 4 5 Machine A Machine B Initial cost ($000) Residual value 550 480 50 30 The company's cost of capital is 10%, Required: a. Evaluate each machine, using the following methods: i. Accounting rate of return Payback; Net present value. 11. 111. b. Discuss the importance of capital budgeting in organisations.