Two manufacturing plant options are up for consideration by a company: Plant #1 and Plant #2. Plant #1 requires start-up spending of $250,000 and will require operation and maintenance (O&M) costs amounting $4,000 annually. The expected benefits will amount to $89,000 per year. Plant #2 needs an initial investment of $205,000. The O&M costs for this option is estimated at $4,300 a year and the annual benefit is determined to be $86,000. Both machines will last five years, before being bought by a sister company for $15,000. The interest rate is considered as 12%.

a) Draw the cash flow diagram for Plant #1;

b) Draw the cash flow diagram for Plant #2;

c) Use an appropriate method for determine which plant the company should choose as its investment.