QUESTION 9 Jimson Inc is considering the purchase of a new machine. Two different machines will suit her purpose. The cash flows are given: Machine Argo Cost $210,000 Estimated net cash flows Machine...

Extracted text: QUESTION 9 Jimson Inc is considering the purchase of a new machine. Two different machines will suit her purpose. The cash flows are given: Machine Argo Cost $210,000 Estimated net cash flows Machine Binko Cost $180,000 Estimated net cash flows $ Year 1 70,000 80,000 90,000 93,000 55,000 70,000 83,000 42,000 Year 2 Year 3 Year 4 Calculate the NPv (assuming both machines have useful life of 4 years and have salvage value of 10% of the initial investment) for each of the two machines. The cost of capital of the firm is 10% p.a. The firm uses straight line method depreciation with useful life of 4 years. Advise Jimson Inc which machine is recommended. Justify your answer.