The Bluff Company specializes in plastic flowers. Currently, the company is analyzing purchase alternatives for a flower-manufacturing machine. Data relevant to the decision are as follows:

	Machine X	Machine Y
Cost	$80,000	$72,000
Useful life	6 years	5 years
Residual value	$2,000	$3,000
Estimated annual net cash flows	$32,000	$28,000
Present value multipliers at 15 percent:
Dollar received at the end of five years		.497
Dollar received at the end of each of the next five years		3.352
Dollar received at the end of six years		.432
Dollar received at the end of each of the next six years		3.784

a. Compute the payback period for each of the alternatives. Round answers to two decimal places.

b. Using the net present value method, prepare an analysis to determine which machine the company should purchase. (The company uses a 15 percent minimum desired rate of return.)

The Bluff Company specializes in plastic flowers. Currently, the company is analyzing purchase alternatives for a flower-manufacturing machine. Data relevant to the decision are as follows:

	Machine X	Machine Y
Cost	$80,000	$72,000
Useful life	6 years	5 years
Residual value	$2,000	$3,000
Estimated annual net cash flows	$32,000	$28,000
Present value multipliers at 15 percent:
Dollar received at the end of five years		.497
Dollar received at the end of each of the next five years		3.352
Dollar received at the end of six years		.432
Dollar received at the end of each of the next six years		3.784

a. Compute the payback period for each of the alternatives. Round answers to two decimal places.

b. Using the net present value method, prepare an analysis to determine which machine the company should purchase. (The company uses a 15 percent minimum desired rate of return.)