2. Alternative analysis (30%) Assuming we are going to add a machine to improve the productivity of our construction site, we can purchase or rent it. The detailed information is shown in the following table. The annual discount rate is 12%. Purchasing Renting Costs Revenue Purchasing -A or $30,000 Maintenance and Replacement Costs Year1-3: $13,000 per year; Year4-6: $10,000 per year; Fixed costs: $1,600 per year; Variable costs: Year1-4: $1,000 per year An annual growth rate of 8% from Year 5 onwards. Expected life 6 Salvage value $2,000 Renting -B Deposit: 10,000 $7,000 at the end of every year Yearl: $12,000. An annual decrease of $1,000 from Year 2 onwards. According to the leasing contract, the lessor is responsible for the maintenance, and the deposit will be given back when the leasing contract expires. The contract needs to be renewed every 4 years. 4 0 (1) Draw the cash flow diagrams. (10 marks) (2) Calculate the Net Present Value (NPV) of the two alternatives respectively and then assess them. (20 marks)