your company is considering the purchase of a machine that would cost $170,000 to purchase, would last for 7 years, and would have no salvage value in the end. The machine would increase annual costs by $10,000 per year.

There is another machine that would cost $170,000 and would last for 5 years, at the end of which, the machine would have a salvage value of $20,000. The machine would increase annual costs by $14,000 per year. Additional working capital of $7,000 would be needed immediately, none of which would be recovered at the end of 5 years.

The company requires a minimum return of 10% on all investment projects. [ignore income taxes in the calculations]

Which machine should the company buy, based on time value of money, assuming that it must buy one of these two machines as needed by the Environmental Protection Act?