The managers of Freezerlife plc, which manufactures refrigeration units, are currently considering two mutually exclusive investment proposals involving the purchase of new machinery for the manufacture of a new pump used in the construction of their refrigeration units.

The following estimates have been made in relation to the use of each of two machines.

Cost(immediate outlay 1 February 2021)400,000( machine A) 240,000 ( machine B)

Expected annual net profit (loss) end February

2022 150,000 (machine A) 51,000( machine B)

2023 157,000(machine A) 65,000(machine B)

2024 58,000( machine A) 9,000( machine B)

2025 144,000(machine A) 69,000( machineB)

2026 124,000(machine A) 74,000( machine B)

2027 104,000(machine A) 49,000 (machine B)

The required rate of return (opportunity cost of capital) is 15% for both machines. According to the Net Present Value (NPV) and simple Payback rules, which machine would you invest in? Explain your reasoning as to which machine you will choose to invest in.