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Beryfs lced Tea currently rents a botting machine for $52,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is

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Beryfs lced Tea currently rents a botting machine for $52,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $165,000. This machine will require $24,000 per year in ongoing mainsenance expenses. b. Purchase a new, more advanced machine for $260,000. This machine wil require $15,000 per year in ongoing maintenance expenses and will lower botting costs by $13,000 per year. Asso, $36,000 will be spent up front to train the new operators of the machine. Suppose the appropriate discount rate is 9% per year and the machine is purchased todsy. Maintenance and bottling costs are paid at the end of each year, as is the cost of the rental machine. Assume also that the machines will be depreciated via the straight-ine method over seven years and that they have a 10 -year life with a negligible salvage value. The marginal corporate tax rate is 30%. Should Bery's lced Tea comtinue to rent, purchase its current machine, of purchase the advanced machine? To make this decision, calculate the NPV of the FCF associated wath each alternative

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