Question 2) Kingston Plc is considering the purchase of a new machine. It has identified two possible machines with initial costs and expected cash savings per year as follows: Co C1 C2 C3 C4 Machine A - 100,000 45,000 35,000 60,000 Machine B - 100,000 95,000 15,000 16,000 10,000 Machine A has a useful life of 3 years while machine B has a useful life of 4 years. Neither of these machines have any residual value at the end of their lives. The company will only purchase one of these machines. The opportunity cost of capital for Kingston Plc is 10% per year. If Kingston Plc is going to replace the chosen machine each time when it reaches the end of its useful life, which machine would you recommend the management to invest? a) The equivalent annual values of machine A, B are 6,000 and 5,557 respectively. A should be bought. b) The equivalent annual values of machine A, B are 5,000 and 4,557 respectively. A should be bought. c) The equivalent annual costs of machine A, B are 6,000 and 5,557 respectively. B should be bought. d) The equivalent annual costs of machine A, B are 5,000 and 4,557 respectively. B should be bought. Question 3) Referring to Question 2, suppose the Net Present Value (NPV) of machine A at 20% is -3,485. What is its approximated internal rate of return? a) 18.11% b) 20% c) 15.6% d) 8.5%