The manufacturing operation of Curchen Corp presently uses three machines. These machines are now 5 years old and each had an original first cost including installation of P 180,000. They were originally expected to be used for 10 years. If sold now, each machine can be sold for P 60,000. The annual operating expenses for each machine have been as follows: One operator at P 480 per day, 300 days a year; annual power consumption cost is P 25,000; maintenance is P 10,000 a year. Taxes and insurance are 5% of the original first cost.

A new automatic machine which will have the same capacity as the three old machines is now available at an estimated first cost including installation of P 1,000,000. It is expected to last for ten years with an estimated salvage value of P 50,000. The annual operating expenses are expected to be as follows: One operator at P 1,000 per day, 300 days a year; annual power consumption cost is P 100,000, and maintenance is expected to be P 50,000 a year. Taxes and insurance are 5% of the first cost.

Depreciation is computed using SFDM at 12% and money is worth 20% to the company. Using ROR - Find the total annual costs of both old and new machines. Will ROR_AI be needed? Using AC Method - Find the minimum required profit and total annual cost of both old and new machines.