Two machines - Machine M and Machine P - are being considered in a replacement decision. Both machines have about the same purchase price and an estimated ten-year life. The company uses a 12 percent minimum rate of return as its acceptance-rejection standard. The estimated net cash inflows for each machine follow.

Year Machine M Machine P

1 $12,000 $17,500

2 12,000 17,500

3 14,000 17,500

4 19,000 17,500

5 20,000 17,500

6 22,000 17,500

7 23,000 17,500

8 24,000 17,500

9 25,000 17,500

10 20,000 17,500

Residual value 14,000 12,000

1. Compute the present value of future cash flows for each machine, using Table 1 and Table 2.