2. Suppose you have to decide between two alternative machines (or two alternative maintenance policies). The investment at t=0 for each of them is $90 million. Machine A will last for 6 years and will generate annual cash flows of $60 million every year from t=1 to t=6, while Machine B will last for 9 years and will generate annual cash flows of $45 million every year from t=1 to t=9.

Given a discount rate of 7.5% per year, work out the NPV (Net Present Value) of each machine, and state which machine is more attractive financially (a) without future replacement, and (b) with future replacement.