XYZ Ltd. Is considering the purchase of new machine. Two alternative machines (A & B) have been suggested, each having initial cost of Rs. 1000000 and requiring rs. 50000 as additional working capital at the end 1st year . Net cash flow are expected to be as follows: machine A – 100000,300000,400000,600000,400000

Machine B- 300000,400000,500000,300000,200000 the company has target return on capital of 10% and on this basis you are required to compare the profitability of the machines and state which alternative you consider to be financially preferable.