QUESTION 3 (17 marks) Fairchild Limited is a chip manufacturing company. Because of the increase in sales demand, it plans to invest in a machine which has a more powerful production capacity. It has obtained the information about the two machines supplied by two different suppliers. The cash flows related to the machines are shown below: Machine X $(9,000,000) Machine Y $(9,000,000) Initial cash outlay of the new investment - Year 0 Expected net cash flows: - Year 1 - Year 2 - Year 3 -Year 4 $4,000,000 $4,000,000 $1,500,000 $500,000 $1,000,000 $3,000,000 $3,000,000 $4,000,000 Fairchild Limited requires a 10% return per annum on its investments. The following table value is provided for computing the net present value of the cash flows. Periods 1 2 3 4 Present value of 1 at 10% 0.9091 0.8264 0.7513 0.6830 Required: (Show all calculations and round ALL answers to 2 decimal places.) a. Calculate the payback period for both Machine X and Machine Y. (Assume cash flows are received evenly within each year. (6 marks) b. Calculate the net present value for both Machine X and Machine Y. (Assume cash flows occur at end of each year.) (6 marks) c. If the company can only invest in one machine, based on the net present values of the two investments obtained from (b), which machine should be accepted and give reason(s)