Raysut Cement Ltd. envisages purchase of a machine to augment the companys prodcution capacity to meet the forecasted sales demand for its products. There are two machines under consideration of the management. The relevant details of estimated annual expenditure and sales are given below: The company pays tax @ of 30%.

	Machine 1	Machine 2
	$	$
Cost of Machine	200,000	150,000
Estimated Annual Sales	300,000	240,000
Cost of production (estimated)
Direct Materials	50,000	30,000
Direct Labour	40,000	50,000
Production Costs	60,000	50,000
Administration Costs	20,000	10,000
Sales Promotion	10,000	10,000

The useful life of Machine 1 is 2 years, while it is 3 years for machine 2. The scrap values are $20,000 and $15,000 respectively.

a) Calculate the Pay Back Method for both the machines.

b) Comment on your calculations in 'a' above.