QUESTION (23 marks) Featherlike Company manufacture mattresses and is evaluating the choice of choosing one of the two advanced machine to help them in the production process. 1) Machine 1 costs $600,000 with an annual constant net cashflow return of $240,000 a year for 5 years with a resale value of $20,000 cash at the end of its useful life. 2) Machine 2 costs $500,000 and estimated to have useful life of 4 years with a resale value of $20,000 cash at end of 4 years. Management has estimated the following net income projection return from the machine over the 4 years of useful life: Year Net Income $ 160,000 120,000 100,000 80,000 $ 460,000 The company's minimum desired rate of return on investment is 15% and targeted a payback period of 3 years on this investment. The company uses straight-line method of depreciation on all its fixed assets. 1 2 3 4 Required: Based on the above information, determine the: a) Payback period for Machine 1 and 2. (4 marks) b) Average rate of return on investment on machine 1 and 2 (4 marks) c) Net present value (NPV) for machine 1 and 2. (8 marks) d) Which of the two machines should the company proceed with the investment? Explain (1 mark)