Raab Company is expanding its production facilities to include a new product line, a sporty automotive tire rim. Tire rims can now be produced with little labor cost using new computerized machinery. The controller has advised management about two such machines. Details about each machine follow.

Extra info: accounting rate of return for HZT machine; 13.4%

Payback period for HZT machine; 6.1 years

	HJS Machine	HZT Machine
Cost of machine	500,000	550,000
Residual value	50,000	55,000
Net Income	34,965	40,670
Annual net cash inflows	91,215	90,170

The company