The economic life of Machine 1 is 2 years while it is three years for other two. The scrap values are Rs 40,000, Rs 25,000 and Rs 30,000 respectively. Sales are expected to be at the rates shown for each year during the full economic life of the machines. The costs relate to annual expenditure resulting from each machine. Applicable tax rate is 50% of the net earnings of each year. It may be assumed that all payables and receivables will be settled promptly. Interest on Capital to be paid at 8% pa You are requested to show which machine would be most profitable using payback period? Pay Back Period Original Cost Sales at standard prices Net Cost of Production Direct Material Direct Labour Factory Overheads Machine 1 Machine 2 3,00,000 3,00,000 5,00,000 4,00,000 40,000 50,000 60,000 Administrative Cost 20,000 Selling and Distribution Cost 10,000 50,000 30,000 50,000 10,000 10,000 Machine 3 3,00,000 4.50,000 48,000 36,000 58,000 15,000 10,000