What is the Cash Flow for Year 1?

5. A rice flour mill is seeking to maximize its productivity with an improved grinder. It can repair its existing machinery or buy a new one. For buying purposes, two alternative machines are in consideration. Machine A costs 125,000 but yields a 10 percent savings over the current machine used. Machine B costs 525,000 but yields a 35 percent savings over the current machine used. The repair and maintenance costs of the existing machine are provided in the following table. a. Which machine should the mill purchase if a discount rate of 13 percent is considered? b. Assuming the discount rate is reduced to 7 percent, will there be any change in the decision